Seeking promising start-ups

Local recycling company RecyGlo last week emerged as the winner of the Seedstars world competition in Yangon. The start-up beat nine other local entrepreneurs to represent Myanmar at the Asia Seedstars Summit, making it eligible for US$500,000 (K767 million) in equity investments if it wins the final competition in Switzerland next April.

RecyGlo’s aim of helping Myanmar businesses and households tackle waste management, with the aim of achieving zero waste and a zero carbon footprint, led the jury to believe it had the most potential for growth in the country, Seedstars told The Myanmar Times.

Klenic and Hydro Plant finished second and third, respectively. Klenic’s digital platform for medical records, health information and payment systems is expected to increase convenience and lower healthcare costs, while Hydro Plant builds precision control systems for farmers to better control and manage their produce, Seedstars said. Klenic, Hydro Plant and Recyglo, together with the other 7 finalists of the Seedstars Yangon 2019, will also join the on going Investment Readinessprogram, a non-time bound democratised acceleration program that aims to prepare the startups to receive investment.

RecyGlo provides waste collection and recycling to around 400 non-governmental organisations, companies, hotels and offices, including the Savoy Hotel, H&M, Panasonic, IFC and Sakura Tower. More recently, factories in the industrial zones and some banks have shown interest, Ma Shwe Yamin Oo, founder of RecyGlo, said in an interview in March.

Investors have started paying attention to the company. In February, RecyGlo was accepted into the Katapult Ocean Accelerator Programme of Norway and will receive US$150,000 in funds, which will raise its value to US$1.8 million.

The start-up is planning to expand to other cities in Myanmar. “We will try to offer more streamlined services in Bagan and Mandalay besides Yangon,” Ma Shwe Yamin Oo said.

“As long as people are disposing of waste, we have to collect the garbage. There is no deadline in this business as in an NGO project. It will be done for the long-term. There will be this type of job as long as the country exists. In fact, waste disposal is a problem not only in Myanmar but throughout ASEAN, so we intend to go regional,” she said.

Since participating in Phandeeyar’s annual start-up challenge in 2017, RecyGlo has raised US$200,000 in investments. It claims to make between US$30,000 and US$50,000 monthly and expects to make US$500,000 this year.

Scouting for start-ups

The aim of the Seedstars competition is to sniff out emerging-market start-ups that have raised less than US$500,000 in funding but have built a minimum viable product, and connect them with global investors.

Previous winners of the competition have gone on to raise more funds for expansion. Earlier this month, Seedstars 2017 winner Kargo announced it had raised US$800,000 in a pre-Series A financing round led by Singapore-based venture capital fund Cocoon Capital.

Kargo, which started out in 2016 at Phandeeyar, enables easier truck delivery services by connecting truck owners with businesses or individuals through a mobile application. It plans to use the fresh infusion of funds to expand outside Myanmar in the next 12 months.

Earlier this year, Kargo raised US$130,000 through Yoma Bank’s unsecured SME financing programme. In 2018, it secured a six-digit dollar grant from the GSMA Ecosystem Accelerator Innovation Fund.

Last year, the winner was New Day (Neh Thit), Myanmar’s first smart phone-centric low-income jobs platform enabling easily-accessible job-matching and skills-training. New Day is a beneficiary of a six-digit grant under GSMA’s Ecosystem Accelerator Innovation Fund. The fund is supported by the UK Department for International Development, the Australian Government, the GSMA and its members.

Seedstars says its annual start-up competition is the largest in emerging markets. The start-ups compete to represent their country, and the winner is invited to attend one of five regional summits, where they can network with regional investors and mentors. “The stakes are higher than ever, as we’ve been in this ecosystem for more than five years now and know there are companies in Myanmar developing high-quality products,” said Rosie Keller, regional manager for Asia at Seedstars. The winners will represent their countries and compete for US$500,000 in investments at the final Seedstars Summit in Switzerland.

Getting started

In Yangon, there are a number of other acceleration and mentoring programmes for entrepreneurs, such as Phandeeyar, which is supported by Silicon Valley-based philanthropic investment firm Omidyar Network with a US$2 million grant.

The tech hub organises workshops, events and hackathons, both in support of technology start-ups and technology advocacy for civil society. It runs Start-up Challenge, Founder Institute Yangon, and Phandeeyar Accelerator.

In February, Phandeeyar Accelerator chose five of what it considered the most promising tech start-ups in the country to join its third cohort. The start-ups received up to US$25,000 in investment as well as office space to develop their ideas.

The five include Asia Art Connect, a professional digital marketplace serving as a platform for local and regional artists to sell their work to the international market; and HivePhing, an online platform that links blue-collar workers in the construction industry, such as masons, carpenters and painters, to projects.

There is also Hydro Plant; Nay Yar, which curates affordable housing options for low-to-middle income earners; and One Sett, an online marketplace for local tailors who cannot afford to open their own shop.

Since the first Phandeeyar Accelerator cohort was launched in 2016, 11 tech start-ups have graduated, and four of them have received follow-up funding from local and international investors, as well as from Phandeeyar.

Besides RecyGlo, the programme’s alumni include Chate Sat, Ezstay, GoP, White Merak, Amazing Express, MMTutors, NextCode, Pancasikha, Shwe Bite, and Kone Si. Phandeeyar was also an early backer of fitness app Flexible Pass.

Investor interest

Lured by the promise of growth, venture capital funds have also taken an interest in Myanmar start-ups. Last month, Myanmar-based education technology platform eSchool secured an investment of US$700,000 from Blue Tech Venture Co Ltd, a local firm.

Myanmar-based Rent 2 Own, which offers motorcycle rental services to promote mobility and job opportunities for low-income people, raised US$3 million in debt financing from Belgian fund Incofin CVSO. This comes six months after Rent 2 Own raised US$6 million in funding from investors, including agRIF, an impact-focused fund managed by Incofin Investment Management.

Late last year, Emerging Market Entrepreneurs Asia, which is backed by Emerging Markets Group Holdings and UMJ Ikeya Investments, launched a Myanmar-focused fund. Two of its first few investments include CarsDB, an automobile classified site, and Joosk, a digital animation and illustration studio.

Other funds include Daung Capital, Seed Myanmar, Luminate, and BOD Tech Ventures, which has invested in start-ups such as Yangon Door2Door, MMBusTicket and building ventures of their own, like ride-hailing app Get.

Seedstars finalists

Besides RecyGlo, Klenic and Hydro Plant, the seven other start-ups chosen to pitch to the Seedstars jury in Yangon last week were:

Paypoint Myanmar: simplifies bill payments, creating trusted automated distribution networks and secondary income streams for SMEs.

Tun Yat: first tech-enabled platform to capture market share in a 3-year tractor market.

Flexible Pass: a fitness pass that gives users access to over 120 locations with 20 different fitness activities in Myanmar.

DDIY: a trusted online home concierge company that provides and manages a suite of in-home services.

Marathon Myanmar: a door-to-door delivery and cash-on-delivery service company with a nationwide network of 72+ cities in Myanmar.

Myanmar Youth Empowerment Opportunities: an online and offline integrated learning community for Myanmar youth to improve their skills in preparation for industry 4.0.

Zay Chin Co. Ltd: All-in-one grocery delivery marketplace that sells products from fresh markets and supermarkets.

Source: Myanmar Times

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