2018 Rearviewmirror - The Sri Lankan Startup Ecosystem: outcomes, insights & trends through our eyes.
You can’t connect the dots looking forward; you can only connect them looking backwards. These were the famous words spoken by Steve Jobs at the 2005 Stanford University Commencement Address. Looking back helps you visualise your trajectory. Hence, connecting the dots is vital for us to streamline our efforts. Furthermore, it allows us to evaluate our inputs and outcomes. In this post, we would like to share our activity during the past 12 months. We will also share a few insights from our point of view.
Activities are the engagements we had with the startup community at large. By supporting these initiatives, we’re able to identify promising startups around the island. Our work begins when the founders are keen to take their ideas forward. Only a handful decides to continue, hence the conversion has been slow in the short-run. We believe that it’s the outcomes that define a startup ecosystem. This matches with the research carried out by the Kauffman Foundation. Hence, the challenge is measuring our efforts and how they link to the outcomes we pursue.
Inputs are activities that contribute to the proliferation of entrepreneurship across the island. These are some of the initiatives we partnered and supported during 2018. To evaluate our impact, we categorise them into three segments. Events help us build relationships with stakeholders, reach different geographies and build brand recognition. Workshops allow us to connect with potential customers aka startups. The third is pretty straightforward, share our knowledge & experience.
- Startup Weekend — Kandy & Colombo
- CIMA Launch Pad
- IEEE Humanitarian Tech Product Competition
- spiralation — ICTA
- KVA -Mobitel
- Angel Pitch — LAN
- CodeSprint — IIT
- OSLO Innovation Week
- Hanging by a Thread — GSW
- Bandwagon — Pitching Your Business
- Disrupt Asia — Investor Forum
- IEEE Innovation Nation
- Southern IT/BPM Week — SLASSCOM/ICTA/FITIS/EDB
- Becoming Investor Ready — spiralation
Knowledge Sharing Sessions
- South Asia Connect Nexus
- ITC — Startup Ecosystem Mapping
- The Business Mingle (panel discussion)
- Landing Your Dream Job (panel discussion)
- Entrepreneurship Forum — SLASSCOM
The macro outcomes are funds raised and investors connected. We look at the distribution of angel investors to increase diversity. But our main KPI is the growth of each startup. We have now started supporting startup post-fundraise so that they have a better chance at facing the Death Valley.
One of the early startups to raise funds with us have shown a 10X valuation growth in one and half years. The angels who supported them, in the beginning, even took part in a bridging round. Some of them would be looking to part exit in the next round (Series A).
Insights & Trends
Fundraising is not a causal factor for success. Funding often comes after you have demonstrated traction. You also don’t gain traction from day one. And you can also gain traction by being everything to everyone. Everything from product features to customers needs to be broken down into phases.
While there were many mentoring and training sessions, fundraising seems to be the priority for most entrepreneurs. We met quite a few founders who had great ideas but never launched. They mentioned not being able to raise funds as the main reason. Early-stage startups need to focus more on customer development than product development. While this is being advocated by many, adoption seems to be low. We’re looking at doing more workshops and knowledge sharing session in 2019 to address this gap.
We recognise Jaffna & Kandy as tier 2 startup cities in Sri Lanka. While most would agree with us, what we saw as unique was the quality of startups. Initiatives such as Yarl IT Hub & Startup Weekend have played a significant role in fueling this growth.
- Perhaps the most significant trend would be experienced folks quitting their corporate job. Some launched their own while others joined startups with a focus on accelerating their growth. E.g.
- Since 2017, there quite a few initiatives focusing on female entrepreneurs. We believe as a result there were more female entrepreneurs launched their startups in 2018.
E.g. JustGoodness a marketplace for all things organic, natural and non-toxic
- Finally, we saw that more and more founders are looking to solve more complex problems. Solving these problems may take longer but have a higher socio-economic impact.
E.g. Porroki an autonomous robot that aiming to solve marine pollution
The next 12 months
Our value proposition is to make fundraising more accessible, strategic and less painful. However, raising funds alone will not solve the problem at large. During a seed and/or angel round, we’re looking for promising startups. In your next funding round, investors are looking for performance. We have build mechanisms to identify promising startups and connecting them with angel investors. Now we will focus on helping promising startups get on a growth path. The past 12 months gave us insights and data on the specific challenges startups face. Especially with regards to slow growth and high expenses. Trying to flip this phenomenon would be the goal for 2019.
Before we sign-off 2018, we would like to share an important milestone. The International Trade Centre (ITC) carried out a study to map the entrepreneurial ecosystem in Sri Lanka. ITC is the joint agency of the World Trade Organization & United Nations. The study identifies us as one of the key organisations based on user experience. We’re humbled by this achievement and would like to dedicate it to the founders of our portfolio. This achievement wouldn’t have been possible if not for them. With that note, may the magic and the wonder of the holiday season stay with you throughout 2019.