The Nepali startup ecosystem, which has started to grow from a nascent stage, needs every type of support it can get from stakeholders to become vibrant.
--BY NIKEETA GAUTAM
The last two months have been quite eventful for Nepali startups. First, Foodmandu, Nepal’s largest food delivery platform, has secured its second-round investment from Team Ventures, a private equity (PE) firm. Then, Health at Home, a healthcare services portal, also got funding from Business Oxygen (BO2), Nepal’s first PE fund. It was followed by first round funding of Rs 90 million in e-commerce site Sastodeal from Dolma Impact Fund.
The flurry of investment by PE firms illustrates how Nepali startup ecosystem is growing from its infancy and how startup companies are slowly becoming avenues of investments. The last 7 to 8 years have seen an emergence of energetic youths with different innovative entrepreneurial ideas and solutions. Networking events, pitching sessions, mentorship and events related to alternative financing are some of the areas that have noticeably grown over the decade.
The Nepali startup ecosystem is now inundated with several tech integrated ideas in sectors such as agriculture, hospitality, e-commerce, digital payment, education, entertainment and many more. To name a few, R&D Innovative Solutions, Red Mud, eSewa, Khalti, Cloud Factory, Health at Home, Online Ausadhi, Sastodeal, Urban Girl, Kirana Pasal, Foodmandu, Foodmario, Khalisisi, Tootle, Karkhana, Upaya City Cargo, Bricks, Sajilo Marmat Sewa and Gham Power are some of the impactful and growing ventures. Many of these ventures are in the startup phase. And some have been sustaining and scaling themselves in the market for around a decade.
Though there is no particular definition and criteria for a ‘startup’ to be a startup, experts believe that the enterprise must be innovative, tech-driven and scalable to come in the bracket.
Many other impactful ventures have been able to partner with thousands of clients which include farmers from rural areas. R&D Innovative Solutions is one such enterprise which has connected with 17,000 farmers helping them to add value to their production and marketing.
There are companies like Khalisisi, which has not only been bridging the gap between waste sellers and trash collectors but has also created an environment of self-respect when doing the job. 300 Khalsisi friends of the startup connect with customers through an app and come to the doorstep to collect the trash.
How it All Began
The attention towards youth entrepreneurship began in 2003 when the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) officially instituted Nepal Youth Entrepreneurs Forum (NYEF). From mentorship to providing a platform for marketing and investment through its pool of angel investors, NYEF has been a crucial player in the youth entrepreneurship ecosystem.
It was around 2008-2009 when a few players in the Nepali Business Ecosystem started free events like Last Thursdays organised by Entrepreneurs for Nepal (E4N) and workshops like Arthalaya (school of economics and entrepreneurship) organised by Samriddhi Foundation, an economic policy think tank. “Though Last Thursdays kept both businessmen and entrepreneurs in the same place, it helped the society to get a few role models in the world of business,” says Ashutosh Tiwari, managing director at Safal Partners, an investment management company. Tiwari was one of the co-founders of E4N which was started in 2008. Similarly, Arthalaya workshop created a platform where young graduates learnt about the know-how of entrepreneurship and the unseen intentions and consequences of policies in business. “Arthalaya developed three kinds of people - entrepreneurs, economic researchers and economic writers and bloggers,” says Deependra Chaulagain, director of operations at Samriddhi Foundation. Prior to these initiatives, programmes like Micro Enterprise Development Program (MEDEP) started in 1998 (now Micro Enterprise Development for Poverty Alleviation) by UNDP and the Government of Nepal produced many micro-entrepreneurs in the areas of farming, handicraft and other conventional sectors.
In 2011, Vidhan Rana started Biruwa Ventures, an alternative workplace and helped several entrepreneurs by providing them shared spaces. During the time, the country was going through long hours of daily power cut also known as ‘load-shedding’. The co-working spaces concept initiated by Biruwa encouraged many others to start a similar concept. The venture also facilitated mentorship and investment while working with entrepreneurs.
Another major community was formed in 2012 when a group of entrepreneurs came together to support and encourage the youth with innovative ideas. “We decided to build a community when we listened to various new ideas. But ideas were not enough to start entrepreneurship, so we started working on developing an entrepreneurial mindset,” says Suman Shakya, co-founder of Nepal Entrepreneurs Hub (NEHUB).
Startup Weekend is one of their key platforms which has already worked with around 700 youths and has reached its 15th edition. “Among them, 12 percent have their own business now,” says Shakya.
In the last five years, many support systems including boot camps, seed camps, incubation and startup meets have been held. Some of the monthly and weekly meets including Monday Morning Coffee Queries organised by Clock B Business Innovations and Monday Morning Meeting organised by NYEF have been playing key roles to spread the entrepreneurial vibe among energetic youths willing to initiate innovation in different sectors.
Over a decade ago, there were hardly any students in college who wanted to become entrepreneurs. Today, there are very few who don’t want to pursue entrepreneurship. With this mindset developing among the school and college students, universities have also been coming up with business incubators to develop an entrepreneurial culture among students.
Some of the colleges which have been running incubation centres are Kings College, Kathmandu University, Uniglobe College and Presidential College of Management Sciences.
Idea Studios, the first business incubation centre in Nepal, has been running lab-based two-month long incubation programmes and also a reality TV show where ideators pitch their ideas. I3 Business Incubation programme is another initiative by Nepal Communitere. Antarprerana is also another company which has been organising incubation programmes for college students and entrepreneurs outside the Kathmandu Valley.
After 2014, business accelerator programmes were started to support the startups to scale up. Next Venture Corp, Rockstart Impact and Enterprise are three regular accelerator programmes. Gradually, people with money and enthusiasm came forward in the scene as angel investors to collaborate with innovative entrepreneurs.
On the other hand, large PE firms including One to Watch, True North Associates, Business Oxygen and Dolma Impact Fund also have emerged as an alternative financing platform for promising and impactful ventures. “When BO2 started almost five years ago, there was very little idea about what private equity venture capital was all about. But now, there have been so many workshops and competitions where the likes of Microsoft and the Indian Embassy have been involved,” says Siddhant Raj Pandey, Chairman and CEO of Business Oxygen.
“The best part, in the past four years, as an alternative form of financing in Nepal, is the access to finance to private equity. This not only brings capital but also knowledge transfer as well as capacity building, technology-wise,” says Pandey.
After around a decade of efforts, today, the entrepreneurial climate has changed, especially in the capital city. Thousands of aspiring youths pitch their ideas every year in different pitching events. Several hundred enter boot camps and among them, a few start their ventures. NavaUdhyamshala, organised by Antarprerana, Startup Weekend organised by NEHUB and Udhyami Seed Camp organised by Startups Nepal are a few boot camps done regularly. “Startups have been one area where the youth have been doing experimentation. Though many ventures don’t turn sustainable; they fail, get up, learn and go for it again,” says Binay Devkota, founder of Clock B Business Innovations, a Nepali firm specialising in startup business consulting and investment.
Similarly, events incorporating various stakeholders in the startup scene have been increasing every year. There are 5 to 6 major events relating to startups each year. Nepal Startup Summit, Next Growth Conclave and Connect In are just some of them. “The interesting thing is nowadays I find 70 to 80 percent new faces in every event. This was not the scenario two years back,” says Devkota of Clock B. This shows that these platforms are bringing massive networking opportunities.
Sunita Nemaphuki, who started R&D Innovative Solutions in 2010, says that the approach towards agriculture has evolved in the last 10 years. “Earlier, people used to associate agriculture with production and trading only. Now, agriculture is directly related to entrepreneurship. And the best part is, the youth are coming to this sector,” says Nemaphuki.
Market Demands Seriousness
More and more youths are coming into the scene and meanwhile, a critical mass questioning the sustainability of such ventures is also growing. “Startups in Nepal are yet to come up with ground-breaking ideas and solutions,” says Niranjan Shrestha, former president of Nepal Young entrepreneurs Forum (NYEF). He thinks that some companies in advanced areas like artificial intelligence (AI) pose a huge potential both nationally and internationally for Nepali startups.
“Gradually, in the process of maturity, many ventures will be filtered and few will survive,” says Niraj Khanal, co-founder of Antarprerana.
The global trend shows that 90 percent of startups fail. Some of the generic reasons for failure are incompetence, personal problems and market irrelevancy. Though there is no concrete data for Nepal, experts say that more than 90 percent of startups are failing in Nepal. The stakeholders including venture capital investors and mentors say that almost 50 percent of startups which existed 4 to 5 years ago have stopped functioning.
N’s Fresh Snack, Koolkat, 11 Beep and Cash on Ad are some Nepali startup companies that received acclaimed for innovative business ideas but were forced to wind down their operations later after becoming unable to sustain financially.
While cash flow is one major reason for the failure, there are various other reasons which contribute to creating failure and crisis in the long term. Except for a few of the founders who are serious about the sustainability of their venture, experts say that many entrepreneurs are still in the fantasy stage. “There are many companies that haven’t been able to scale-up in the last 4 to 5 years,” obseves Narottam Aryal, president of King’s College, which also runs a business incubator for students. The topics of discussion in the gatherings have evolved with time. “Earlier, we used to discuss ideas, disruption and passion. Now, we mostly discuss difficulties, conflicts and challenges of enterprises and stakeholders relating to them,” says Aryal.
During pitching events, there are streams of ideators who share big ideas. But most of them have no idea about their revenue model. While talking to newly established startups, most of them express their vision to go international in the next five years. In reality, they haven’t been able to step out of Kathmandu. “The pitching sessions are full of idealistic expressions, and the pitchers are mostly emotionally charged,” shares Aryal, adding, “The ideas are not grounded and lack logic and data. Most importantly, it doesn’t address consumer needs.”
Events help startups to grow because networks convert to investment and partnerships in the long term. But a rule of life, that ‘too much of anything is bad’ certainly applies to the industry as well. According to investors, startups are mostly busy going to events and participating in panel discussions. “While they should prioritise their finance and operational excellence, they care more about their reputation and social credibility in the market,” says Devkota. Kavi Raj Joshi, co-founder of Next Venture Corp agrees with Devkota on this point. “The founders should be serious in doing their business rather than focusing on gaining trust,” Joshi says.
Sunita Nemaphuki and Damber Khanal, COO of R&D Innovative Solutions, recall the initial days when they used to go to every event relating to entrepreneurship. “Too much panel discussion divides your time when you should be focussing on internal operations,” the husband-wife duo shares.
‘Startup’ being a new concept has been getting considerable space in various media outlets. The contents are mostly positive which creates hype for a particular company. However, experts are cynical about too much media coverage in the initial stage. Nepali entrepreneurs keep talking about Steve Jobs, Mark Zuckerberg, Richard Branson and many other international personalities. But most don’t know about their sustainable revenue model which keeps them in the market. “Many entrepreneurs are getting stardom without achieving success. Now, media should stay back and filter the startups before covering their activities,” suggests Shakya.
According to entrepreneurs, lack of transparency and hesitation to receive help from contemporaries is another reason why many startups fold. Nemaphuki, who started her first business at the age of 17 talks about how she has been overcoming crises related to finances. “The startup ecosystem has been really helpful during the time of crisis. However, we should be open to approaching other entrepreneurs and be transparent about our challenges,” she says.
Startup entrepreneurs like Nemaphuki who have learned from their experiences in running a business in the last few years see cash flow as the lifeblood and operations as the spine of any business. Manohar Adhikari, founder of Foodmandu shares that he was running his software business to maintain cash flow in the initial days of his venture. “I fully came to Foodmandu only after it gained traction in the market after four years,” says Adhikari.
Idea duplication has been another huge mistake of the entrepreneurs due to which they don’t get recognition. Startups also face failure when their ideas become irrelevant in the market. Little market research is carried out, experts say. With the lack of proper research, entrepreneurs end up bringing ideas that are irrelevant in the local market. “In this case, entrepreneurs need to change their business model. Or else the venture will not survive. Entrepreneurs who research continuously and are in the mission to solve real problems will sustain themselves in the market,” says Kavi Raj Joshi, founder and managing director of Next Venture Corp.
Many entrepreneurs have been exploring different ideas with viable business models. Ventures like Foodmario which has been a platform for many homemakers to earn from their cooking skills were also evolved after a lot of brainstorming and research. “Finally, we came up with the idea of Foodmario because I wanted to create a business that can become a platform for others. Meanwhile, we have a good revenue model in this business,” says Rohit Tiwari, co-founder of Foodmario, who pitched his idea at Udhyami Seed Camp. According to Aryal, it takes 3 to 6 months to do proper market research if the idea doesn’t involve too many technicalities and innovation. However, continuous research has to be part of your venture, adds Aryal.
If we dig into the internal challenges of startups, there are problems like payment default and lack of human resource management. “In Nepal, the payment settlement process is very slow. If any corporate house or any client takes the service, they pay only after three months. Many companies also suffer due to payment default,” says Joshi. Besides this, lack of clarity in roles, responsibilities and remuneration of staff is another reason increasing the chance of failure.
A cultural change in terms of entrepreneurship is gradually developing here. But still, people coming from elite and upper-class groups are winning the game. Their wealth and social networks allow them space to sustain longer in the ecosystem, though their products fail.
The middle-class and the lower section have to first take care of their household expenses on top of everything. “Entrepreneurship is more of a class game,” expresses Ashutosh Tiwari.
One of the major reasons for this sort of failure is because of limited finance options. Though banks claim to support startups, in reality, most entrepreneurs face challenges in terms of getting a loan. “It has already been 8 years since I started the venture. But still, banks want collateral if I ask for a loan,” says Ashish Adhikari, co-founder of Red Mud Coffee.
Ayushi KC, founder of Khalisisi says that Nepal lacks angel investors who want to invest in good ideas. “There are people with money. But they don’t want to risk investing in a startup,” says KC.
Startups also often ignore business compliance being unaware of the laws. “It is very important for founders to understand about tax, vat and other compliances,” says Bikaram Prajapati, founder and CEO, Bajra Brick and Tile Industries which manufactures environment-friendly bricks. On one hand, the stakeholders don’t communicate enough about the importance of compliance and on the other hand, even founders overlook the study they need to do to meet the compliance. Deependra Chaulagain shares the necessity to learn about compliance, especially in Nepal. “There is a lack of clarity in the legal provision of Nepal. As there are many loopholes in the act, the government can order to close down a number of companies anytime. So, we should at least have a basic knowledge of the rules and regulations,” says Chaulagain.
Devkota says that the startups themselves should be proactive in taking advice and recommendations from company registration offices and lawyers. “In a developed market, lawyers charge fees to give suggestions and information. But here everything is free. Startups should take the benefit of the new market,” thinks Devkota.
Challenges in Mentorship
As the government has gradually started appreciating the startups and many youths are coming forward with an entrepreneurial mind-set, stakeholders in the startup ecosystem stress on the importance of good mentorship for success.
The rise in the number of people willing to help startups is significant compared to five years ago. Experts and entrepreneurs, however, view that the number of mentors is not enough for the rising number of ideas.
According to Ashish Adhikari, industry-specific mentors are needed at the moment. “Entrepreneurs need to be guided by someone who has faced similar kinds of problems. My ideal mentors would be seniors from the hospitality sector like Karna Shakya and Shyam Kakshyapati. But I have never got an opportunity to interact with them,” says Adhikari.
Experts say that mentors are like therapists who listen to you and help identify your problems. Good mentors listen to ideas actively and engage in ways to convert the idea into reality. “Mentors need to keep questioning. The right mentors keep questioning you till you don’t get to the core of your ideas,” says Narottam Aryal. But according to Aryal most of the mentors here think that they should give suggestions and solutions for problems, which is not mentorship.
Right mentorship is not just about finding a solution to problems in business, but it is also sharing the personal journey of the entrepreneur. However, in the context of Nepal, Suman Shakya observes that the market lacks experienced mentors. “Right mentors come with an experience of 20 to 25 years which can help the entrepreneurs to figure out their direction for their venture,” says Shakya. “But here, people with very less experience are also coming forward as mentors.” Experts say that right mentors can only contribute to making the market mature. Also, they say that even the entrepreneurs here are not ready to learn and be open when it comes to mentorship. “There is less awareness about the importance of mentorship, training and development,” says Niranjan Shrestha.
Similarly, Shabda Gyawali, investment director at Dolma Impact Fund opines that the lack of a proper support system is a challenge for many innovative youths. “Nepal has ideas, but to entreprenereulise it, we need to scale, a finance model should be clear and we need the know-how. There is no support system to give that knowledge to startups,” he says.
In developed markets, the difference between a mentor and consultant differs based on their roles and responsibilities. While consultants work on a specific agenda and charge specific fees, mentorship is more about sharing a business journey where the agendas are not specific. Mentorship is usually based on a mutual interest in a particular venture. However, Nepal being a very new market for startups, these concepts are still not clear in the ecosystem. Nemaphuki believes that mentorship has to be made more systematic. “If we are going to take mentorship sessions, we usually have no idea about the fees they will charge. Sometimes, mentors charge exorbitantly high fees. And sometimes they don’t charge at all,” says Nemaphuki, adding, “If we could set a certain structure in mentoring, it would be convenient for us.”
Entrepreneurs expect confidentiality from mentors. When a mentor is reliable, the mentee can openly discuss their ideas and challenges. While this is effectively practised in developed markets, Nepal is still on the way to achieve this professionalism. Nemaphuki confesses that mentors don’t necessarily follow this ethic in Nepal. “This is the reason, we hesitate to share our ideas and problems,” she says. Deependra Chaulagain agrees and adds, “The trust factor is still lacking in the mentor-mentee relationship in the startup ecosystem in Nepal.” Similarly, Niranjan Shrestha says, “People with innovative business ideas don’t usually come up front due to their fears that their ideas will be copied by others who have financial and other resources.”
Signs of Growth Outside Kathmandu
While the growth has been exciting in the capital, cities outside the valley are also getting exposure to various aspects of the startup culture due to seed camps and incubators that are getting started in different parts of the country.
Entrepreneurship groups like E4N, NEHUB, and NYEF have their chapters and regularly organise interaction in cities including Biratnagar and Pokhara. Next Venture Corp, Nepal Communitere, Antarprerana and Idea Studio mentor the diverse youth from different places of Nepal.
In Nepal, where potential investors even in Kathmandu hesitate to invest in ideas, it looks like a faraway dream for investors to support ideas in other areas. According to the facilitators, the ideas and passion among the youth are amazing in all the districts they have been to. “What lacks is the stakeholders’ willingness to support the ideators,” says Binay Devkota.
Kathmandu has been experiencing a burst of idea pitches and several failures. But the rest of Nepal has been hearing about the growth of startups from social media and news. “Due to this, the youth there has a good idea about the various concept of startups, however, they don’t have a role model whom they can follow,” says Devkota from Clock B Business Innovation. Clock B Business Innovation has been organising various interaction and mentorship sessions with entrepreneurs in Nepalgunj, Hetauda, Chitwan, Pokhara, Biratnagar and Tulsipur.
Shakya says that entrepreneurs outside the valley frequent meet-ups and orientation classes regarding the holistic aspects of startups. “As the youth are highly interested, with the right guidance and mentorship, the ecosystem will see good growth in a few years,” says Shakya from NEHUB. NEHUB had organised a Startup Weekend session in Pokhara.
Joshi of Next Venture Corp observes that places like Pokhara can come up with innovative ideas relating to tourism. Similarly, Devkota says that entrepreneurs in areas like Dang have potential to come up with agri-tech ideas. According to Khanal of R&D Innovative Solution, most entrepreneurs are working to bring innovation in their family business and also trying to create some technology to solve their community’s problems. Antarprenerana has been organising mentorship sessions collaborating with various colleges and district chambers of commerce in Nepalgunj, Chitwan, Birgunj, Hetauda and Biratnagar. According to Khanal, unlike traditional businesses, the new ventures and ideas, especially outside the valley, are prioritising social responsibility and problem solving rather than just profit.
All the facilitators and experts view that local support is essential to create a startup-friendly ecosystem in the areas.
Investment Scenario
People from developed countries invest more in ideas whereas people in the least developed countries invest in properties. The latter invest very little in research; therefore the citizens hardly understand the advantages of investing in innovative ideas. People in Nepal mostly invest in gold and real estate. However, there are very few people willing to invest in innovative ventures. But there are good reasons as to why they are not interested.
Firstly, startups are in a nascent stage. Thousands of ideas are pitched every year but very few of them convert into businesses. And most of which are converted don’t have a long term vision.
Even those who have invested in a startup are not willing to go for the next investment. “There are many such examples where the investors did not get the expected return from startups. Also, there are instances where the startup moved to implement the project and eventually returned the fund,” says Devkota.
Both entrepreneurs and investors do very less research before investing. Many entrepreneurs have no idea about their plans after getting the investment. There are also a few investors who invest without studying the company’s nature. “Investing in a startup is all about uncertainties, so investors should be well prepared before they decide to invest,” says Devkota.
Running a startup is about solving problems in innovative ways. However, it takes a lot of research and time to identify the core problems in the market. So, experts suggest not taking an investment in the initial phase. “It is good to start with savings or getting a loan from family when you begin,” says Aryal. Similarly, Khanal shares that investors are interested only when the startup starts making a customer base.
Experts also observe a lack of communication between founders and investors as one of the reasons that contribute to the misunderstanding. “Many founders in Nepal don’t care about updating the investors with what is going on in their companies,” says Tiwari.
Observing the market trend, we found that the companies that receive investment are highly appreciated. Some of them get media hype and the market categorises them as successful ventures. This is an achievement because it shows that the venture has made an impact on the market, but many don’t realise that with investment comes responsibility. “After the pledge, it takes a lot of time to realise the investment. Over time, companies need to invest their own money to set up the infrastructure as required by the investors,” says Nemaphuki. She adds that investment pledges can also roll back at any moment if they are not satisfied with the founders’ system in due course of time. Entrepreneurs need to prepare themselves for all these challenges before deciding to seek investors for their venture, she shares.
The investment firms share that there is a gap between investors and good companies. “There are many companies which have been making an impact in the market and society for many years. But they have no idea about the presence of alternative finance platforms in Nepal,” says Kavi Raj Joshi. Aryal echoes Joshi on this point.
According to investment firms, venture capitalists are interested in ventures which have gained market traction and have proved that they can sustain. “There are a lot of players out there who are doing cut and paste - there is nothing novel about the idea,” says Pandey. “Then there are certain ideas that the entrepreneur has bootstrapped and used his own money and time with a group of people to bring it to a certain level. That’s where venture capital private equity people will be more interested to seriously look into because that’s indicative of not just passion, but there’s a demonstrable financial capacity that has been proven by taking it to that level,” he adds.
Gyawali of Dolma Impact Fund shares that they invested in Sastodeal after studying the opportunity in the retail market. They decided that the trend of online shopping will gradually increase in Nepal as mobile penetration is very high. With the investment, the plan is to strengthen the software and logistics part of the venture.
Similarly, Foodmandu, which received its second round of investment from Team Ventures, had raised its first round of investment from True North Associates. The company was doing 100 deliveries a day when it received its series one funding but the daily deliveries reached 1,000 when the company received series two funding. Foodmandu invested in office infrastructure, strengthened its human resources and logistics after it received the first-round investment. With the second round, Foodmandu is planning to do geographical expansion and invest in human resources.
“A company like ours needs high expenses to upgrade. So, this is an opportunity for us to expand and upgrade,” says Adhikari. Adhikari says that the venture has made a partial exit to True North Associates and the Team Ventures has bought their share as well.
Policy Intervention
Due to a lack of policy, players in the startup ecosystem face interruption from the government time and again. From the government’s order to stop ride-sharing ventures to controlling social media advertisements, the lack of clarity in policy has been troubling innovative entrepreneurs.
“In terms of the policy level, what is happening with companies like Pathao and Tootle right now is totally against any sort of development towards allowing the future of startups. Regulations should follow innovation, not the other way around. Innovation is being stunted by regulation,” says Pandey.
“The policy has not even defined small and medium industries (SMEs). Startups are still a new concept,” says Suman Shakya. He urges the government to define these terms so that the entrepreneurs and other stakeholders are clear when they work.
Though concepts like challenge fund, seed fund, tax exemption are mentioned in the budget, due to a lack of policy, the decisions are not implemented.
According to Niranjan Shrestha, the policy initiatives of the last couple of years indicate that the government has started to realise the importance of startup companies. “First, it should accept the fact that viable business ideas come from innovative thoughts. Second, the government needs to recognise the role of incubators and business accelerators in the startup ecosystem. Third, the policies should also incorporate the role of alternative financing sources such as PE, VC and angel investors. Overall, there should be a higher degree of acceptance of all these aspects from the government’s side,” says Shrestha.
The stakeholders in the ecosystem urge the government to build proper infrastructure rather than distributing funds to the startups and the aspiring youth. “At the moment, we need the right set of policies to foster the entrepreneurial environment in the country,” says Shrestha.
Another major issue raised by the entrepreneurs is on the limitation set on FDI.
In a market where people are not yet ready to invest in startups, entrepreneurs think that allowing foreign investors would help a lot in their growth. However, the threshold of a minimum of Rs 50 million foreign investment has limited many startups and scaled-up ventures from growth. “We were almost ready to secure second-round investment from Dutch investors in 2019, but amid the process, the policies were changed overnight,” says Adhikari. Such abrupt decisions have been disappointing, shares Adhikari.
Investors and experts say that the government is limiting the growth of many potential ventures. Ashutosh Tiwari opined the government hasn’t yet looked at the picture of startups and SMEs. “For instance, the government says that a small momo shop doesn’t need foreign investment. But it misses the point that the momo shop will become a chain restaurant if it gets investment to improve its service,” says Tiwari. “Foreign investment not only brings funds but also gives us knowledge about an efficient operation, financial know-how and new ideas,” he shares.
Experts say that there is space for a lot of innovation in Nepal. Nepal hasn’t seen many amazing startups yet, so more youths should come into the ecosystem, they say.
While they urge the youth to focus on research and to bring ideas that can bring solutions to the problems in Nepal, they also suggest startups to aim to go beyond the market of Nepal. Apart from China and India, investors, accelerators and mentors urge startups to work to expand in markets similar to Nepal such as Bangladesh and Africa.
