The Race to Build The Killer App in Myanmar is On
There’s great potential in the Golden Country—and investors are taking notice
PHOTO CREDIT: Getty Images
Make no mistake about it: Myanmar finds itself with a narrative unique from its Southeast Asian neighbors.
For one, being in the Golden Country feels like stepping a few decades back in time, when cassette tapes were all the rage (some taxis still use them, in fact) and censorship was still in the PG-13 territory—at least as far as entertainment options in cross-country bus rides are concerned. A stroll along downtown Yangon is quite like taking that proverbial walk along memory lane, with its architectural time capsule of British colonial era buildings in various states of disintegration. The streets are lined with scores of stately Victorian, Art Deco, and neoclassical buildings that are now mildewed and crumbling and covered with dust, and these once-grand structures are now being used as government offices or have been converted into crowded apartments.
It’s against this starkly nostalgic backdrop that Southeast Asia’s next tech startup revolution is unfolding. According to Jes Kaliebe Petersen, accelerator director at tech start-up incubator Phandeeyar, Myanmar has had a game-changing last couple of years. He says, “Traditionally, getting a tech business funded in Myanmar is hard, and with tech start-ups, it’s even harder. There’s a lot of money here, but either angel investors or venture capital firms deploy that capital in more conventional areas or they invest it overseas. Very little of that capital goes into more nascent start-up companies—that is, until recently.”
Until mid-2014, only a diminutive seven percent of the 53 million Burmese population owned a mobile phone. Sim cards were exorbitantly priced at $500 to $1,000. There was only one telco operator — the government-owned Myanmar Post and Telecommunication (MPOT) — and 3G services were practically unheard of. When the government issued licenses to two international telcos in 2013, things changed practically overnight when they introduced new mobile services in 2014. Prices of sim cards dropped to $1 to $1.50, 3G and 4G were suddenly available, and smartphones were sold like hotcakes.
“The latest figures I’ve seen is around 40 to 45 million smartphone users in Myanmar. People access the Internet on mobile, and that number has leapfrogged to around 80 to 90 percent of the population over the course of just two and a half years. It’s growth like nothing else I’ve seen or heard of,” shares Petersen, who prior to joining Phandeeyar as accelerator director, had worked in other emerging markets including Afghanistan where he founded the country’s largest social network, Paywast.
These days, when he’s not working with Phandeeyar’s latest band of tech start-up “cohorts” at the Accelerator’s 6,000 square foot office in downtown Yangon, much of Petersen’s time revolves around “encouraging regional investors from Singapore, Malaysia, Japan, Thailand and so on, to travel to Myanmar and meet our start-ups.”
With the overall economic growth of Myanmar picking up speed, Petersen says this also trickles down to the burgeoning start-up community. Through his work at Phandeeyar, which is seeing a steady growth in participation among locals keen on becoming entrepreneurs, he shares some of his key observations of the country’s start-up evolution.
Unprecedented interest among young entrepreneurs to build start-ups
When founder and CEO David Madden started Phandeeyar in 2014, Myanmar’s start-up ecosystem was in its very early days. Phandeeyar back then was all about organizing events that brought the local tech community together—meetups, workshops, seminars, hackathons, and so on. Over the course of 2015, Petersen says “the team began to realize what the specific demands were where Phandeeyar can provide the most value. So by end 2015, we hosted our Start-up Challenge, a nine-day start-up event where people will gather, pitch ideas, work on start-ups, and so on.”
Currently the only incubator of its kind, Phandeeyar had expected attendance to be around 50 people showing up. Instead, over 200 people participated in 60 teams. “It was hugely successful and was perhaps Phandeeyar’s pivotal moment,” says Petersen. By early 2016, Madden had raised $2 million to run Phandeeyar’s start-up Accelerator program, where they take in “early stage start-ups who have validated demand for their idea and have started building their product. They haven’t necessarily launched their products yet. That’s typically where we take them on. We provide seed funding of $25,000 each, office space at Phandeeyar, coaching and mentoring, free services from partners like Amazon cloud, etc. The idea is to have start-ups build a really strong foundation at which to launch and grow their companies.”
In Myanmar, Facebook is the Internet
When people in Myanmar buy their first smartphone, Petersen says that “more often than not, their first point of touch with the Internet is Facebook.” It’s a phenomenon that holds true for a lot of users in Myanmar where Facebook penetration is “currently somewhere between 20 to 30 million users. Obviously, as people become more tech savvy, they learn more and start using other applications like WhatsApp and Viber, which are becoming pretty common.”
A lot of e-commerce transactions are happening over Facebook as well. Says Petersen, “The last number I saw was more than 3,500 e-commerce businesses in Myanmar happening on Facebook.”
Nobody knows what’s going to be the “The Killer App” for Myanmar
There’s a lot of unexplored potential for tech start-ups in Myanmar. Currently a lot of what Phandeeyar has seen throughout the course of its work with its tech cohorts at the Accelerator and through The Founder Institute—a Silicon Valley entrepreneurship program Phandeeyar franchised—are “low-hanging fruits in terms of services that cater to the urban middle class. It’s mostly apps this segment of the population has seen working in Singapore, Bangkok, and other places in the region.”
Petersen says, however, that much bigger potential exists in building solutions for the bigger part of the population that do not belong to the urban middle-class segment. From job portals and job matching services for rural and blue collar workers to an app that finds affordable accommodation for people moving from the villages to the cities, “these are just some things we feel there’s huge demand for but nobody has really attacked or cracked yet.”
The financial technology space is where possible game changers may arise, points out Petersen. Even with concerns pertaining to regulations—in the mobile money space, for instance, the Central Bank has thus far granted mobile money license to only one company—there’s potential to provide solutions for areas outside the main fintech value chain.
“There are a few companies offering solutions that are doing fintech related services on top of existing fintech products. There’s one start-up that connects utilities with payment centers like banks, mobile money providers, and other payment processors that can accept payment. They bridge that gap and they’ve done really well with that,” says Petersen, adding that he hopes to see more of these fintech start-ups finding their way to Phandeeyar’s Accelerator. With Myanmar’s tech innovation incubator slated to welcome its second batch of Accelerator cohorts later in the year—a call for applications is slated in June—that might just be the case.