Myanmar's start-up ecosystem grows as business conditions improve

 

Myanmar’s start-up ecosystem is coming into its own amid the development of several clusters in Yangon and an easing of business conditions in the country as a whole. Myanmar rose by six places in the World Bank’s “Doing Business 2020” report to 165th out of 190 economies after introducing a mandatory online platform for company registration and reducing incorporation fees, among other measures.

Loring Harkness, CEO of Mote Poh, a Yangon-based start-up that enables companies to offer employees benefits and discounts redeemable via a mobile app, told OBG that changes to the Myanmar Companies Law of 2017 has made a material difference. Since August 2018 private companies may have just one shareholder and one director, rather than two, and foreign-owned entities no longer needed to meet paid-up capital requirements, for example. However, an inability to offer foreign workers visa security remains an issue in attracting international talent.

Harkness said ride-hailing firm Grab’s entry into Myanmar in March 2017 had conditioned people to use online coupon schemes, which in turn assisted businesses like Mote Poh with growing similar models. Mote Poh’s experience is instructive, in that the app is purpose-built for users with a low digital literacy. “There is no typing; it is all one-touch finger punching,” Harkness said, adding that office staff usually require training from scratch to implement Mote Poh’s backend customer relationship management systems.

Clusters & Accelators

Mote Poh is based out of the CB Bank-backed Seedspace Yangon, a new co-working office in the Yangon Innovation Centre, the latter established by the Yangon regional government, and operated in part by Seedstars Yangon and Myanmar-based consulting firm Thura Swiss. Since March 2019 the Seedstars incubator, which provides startups with mentoring and funding, has hosted some 27 start-ups and launched its first academy programme. The academy’s first 10 start-ups include Mitetal, a social media sales automation chatbot; online tailoring service Fashion Geeks; and Intern Plus, which connects new graduates with employers.

Phandeeyar, which is part-funded by the US Agency for International Development, is the most established start-up hub in Yangon, and runs both an accelerator and social impact programme. Start-ups in the accelerator gain access to $25,000, office space, strategic support from the likes of Amazon Web Services and Facebook, as well as six months of coaching from local and international mentors, and access to venture capital financing, in return for 12% equity. More than a dozen start-ups have progressed through the programme since its launch in 2016, with four going on to receive additional funding from international investors.

While the start-up scene is strong at the ideation stage, with numerous hackathons, Yangon’s entrepreneurs have lamented that later stages of development are neglected. Early-stage prospects often fail to expand towards full maturation, and investors are deterred by a lack of successful exits. Few Myanmar start-ups have managed to grow their footprint internationally. Waste collection service company Recyglo is an exception, having expanded into Malaysia since launching in 2017 via Phandeeyar.

Development Prospects

Like much of the economy, Myanmar’s start-up scene is supported by international donors, development programmes and venture capital. In April 2019 Netherlands-based NGO ICCO Cooperation and DaNa Facility, a programme funded by the UK’s Department for International Development, announced they would invest $1m in Phandeeyar’s accelerator and a separate business project.

Myanmar’s start-up scene will only continue to grow in strength as its middle class matures, connectivity and payments infrastructures improve, young founders of companies become more experienced, and Myanmar citizens return from overseas with the capital and the know-how to assist in the country’s local development.

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