Since the end of the Civil War in 2009, Chalinda Abeykoon has been instrumental in shaping Sri Lanka’s startup landscape. He designed the first government-funded incubator, Spiralation, and launched the equity crowdfunding platform Crowd Island. He later joined the Lankan Angel Network, where he, as the CEO, helped attract significant investment, including international investors, to support local startups.

Today, as a Managing Partner at nVentures, a VC fund based in Singapore, he continues to empower entrepreneurs across South Asia.

In this interview, we explore Abyekoon’s experiences, insights, and unique aspects of Sri Lankan entrepreneurship. The conversation offers valuable perspectives on the past, present, and future of entrepreneurship in the island nation.

Edited excerpts:

How long have you been involved in Sri Lanka’s entrepreneurship scene? What initiatives did you take in your initial years? What inspired you to launch nVentures?

I have been involved in Sri Lanka’s entrepreneurship scene since the Civil War ended in 2009. I first joined the government as part of the ICT Agency of Sri Lanka, the apex body at the time, fully funded by the World Bank and under the Presidential purview.

ICT Agency provided small grants to encourage people to start companies because, at that time, we didn’t have an entrepreneurial culture due to the war. People either wanted to leave the country or join one of the existing large corporates and conglomerates.

As the project coordinator, I launched and ran Spiralation for about four and a half years, supporting over 30 companies. I travelled extensively, visiting every state and private university to promote entrepreneurship and organise meetups. We had to encourage people to gather and share their ideas, as there was no existing meetup culture. I was also part of the first Startup Weekend in India, participating in Mumbai, while my friends attended in Bangalore. We held similar events in Sri Lanka.

From 2010 to 2014, there was growing interest in entrepreneurship. By 2014, people were eager to start companies and explore new opportunities.

I then joined Disrupt Unlimited, a fully-owned subsidiary of Brandix, one of the largest apparel manufacturers in the country. It accounts for about 2-3 per cent of GDP and has over a billion dollars in revenue.

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At Disrupt Unlimited, I raised a million dollars to invest in technology companies building solutions for the clothing industry. We identified key areas like supply chain and product innovation, provided market insights and customer problems, and invited entrepreneurs to build solutions. We invested in about four or five companies and ran the programme for about two to three years.

As the startup scene grew, companies struggled with angel funding, which was still new. I exited Brandix and, with a few others, launched Crowd Island, an equity crowdfunding platform. We helped companies with pitching and campaign launches, raising about US$700,000, primarily from overseas Sri Lankans. We were profitable, supporting around 10 companies.

In 2019, we faced significant challenges, including the Easter Sunday attacks and a political coup in 2018, which affected our business. The primary source of capital, the Sri Lankan diaspora, became hesitant. By this time, I had accumulated considerable experience.

I was then invited to be the CEO of the Lankan Angel Network (LAN). I joined the LAN in December 2019, attracted about 100 investors, and created the Angel Fund, pooling standard flat amounts from investors.

All investors were Sri Lankans, 30 per of who lived overseas. We deployed the fund to about four or five companies.

In 2020, I took a break and went to Oxford University. Upon returning, I partnered with Imal Kalutotage and Ashok Verma to launch nVentures, a regulated VC fund with a license from the Monetary Authority of Singapore (MAS).

I joined as a managing partner in July, and over the past 24 months, we have made about ten investments in India, Bangladesh, Sri Lanka, Singapore, and the UK.

Why did you incorporate nVentures in Singapore, not in Sri Lanka?

My partners Imal Kalutotage and Ashok Verma have extensive experience in technology, having held regional roles at IBM, Cisco, and HP while based in Singapore. They launched a startup in 2014, which was acquired for around US$15 million, the largest acquisition at the time by a Singaporean soonicorn.

We learned that while product development could happen in Sri Lanka or other locations, having headquarters in Singapore would provide strategic advantages. Singapore offers excellent regulatory governance, a straightforward framework, and a robust operational model.

Ashok is originally from India but has lived in Singapore for the last 20 years. Imal returned to Sri Lanka in 2014. Our strategy leverages the best of both worlds: high-end talent and a great place to build products in Sri Lanka, combined with the regulatory and business benefits of Singapore.

Sri Lanka’s tech industry is really old. How were the early years of the startup scene in the country, and what challenges did it face?

Before 2010, Sri Lanka didn’t have an ecosystem. We had a few companies like Virtusa, WSO2, 99X, and MIT, which built the world’s fastest stock trading platform, later acquired by the London Stock Exchange. However, these were isolated successes driven by individual teams.

The real ecosystem started to emerge around 2010 after the Civil War ended. The major challenge then was encouraging people to start companies, as most aspired to be doctors, lawyers, or engineers. A significant mindset shift was required.

Additionally, there was no culture of sharing knowledge or collaborating outside one’s circle, which is essential for building companies. Software engineers needed to work with business professionals, and fostering community collaboration was a primary challenge.

Another challenge was that early startups were solving problems specific to Sri Lanka, a small market that limited scalability and investor interest. Many successful companies from that era bootstrapped without raising capital and are doing well now.

Currently, we’re in phase three, where Sri Lankan entrepreneurs are solving regional or global problems using local talent, often with an international focus. The pandemic and other factors have accelerated this trend over the last five years.

There are quite a few problems in Sri Lanka for entrepreneurs to solve. What kind of problems did you see initially, and how was the initial interest from entrepreneurs?

Sectors like agriculture, fintech, and education are prime areas right now. We are still early in these spaces. I specifically focus on fintech, but there’s also significant potential in agriculture.

For example, 50 per cent of Sri Lanka’s land is used for agriculture, but its contribution to GDP is only about 6 per cent, so there’s a lot of room for optimisation. We don’t need to reinvent the wheel; we can take lessons from India, Bangladesh, and other parts of the world to move up the value chain and create opportunities.

There’s also a ton of potential in education. In my personal view, the biggest opportunity lies in the B2B segment, regardless of the vertical.

In the past, e-commerce was nascent. The first significant exit was a company called Anything.lk, which was a mix of Groupon and e-commerce. It was acquired by Wow and then acquired by Dialog, the leading telecom company in the country. Now, we have Daraz, which has kind of taken over that space.

What makes Sri Lankan entrepreneurs unique?

Sri Lankan entrepreneurs are extremely resilient and resourceful, shaped by decades of civil war and political uncertainties. This has made them adept at finding innovative solutions despite challenging circumstances. While many consume information from the US and aspire to the flashy, rock-star image of entrepreneurship, we prefer those who are more grounded.

Though smaller than India, the Sri Lankan market offers substantial opportunities due to higher disposable incomes and per capita GDP. This makes it a good market to validate products and develop MVPs. Sri Lanka offers a quality of life and business environment similar to Singapore, making it attractive for startups.

How did local entrepreneurs initially survive without much capital?

There was always a small community of angel investors. However, many early entrepreneurs were encouraged to bootstrap. If you look at South Asia, including India, our economies post-independence grew based on labour arbitrage. The value proposition was to outsource work to us because we could do it cheaper and better.

India is now ahead by about 10-15 years, having moved beyond this model. Large industries like tea, apparel, and tourism in Sri Lanka and similar sectors in Bangladesh and Pakistan heavily relied on labour arbitrage. But now, people don’t want to be low-cost workers. You don’t need a formal education to gain skills; people can learn coding and other skills through resources like YouTube.

This shift creates opportunities for automation, digitisation, and IoT in large organisations. Many of our successful exits were based on products built for these traditional industries. Because of our deep domain expertise, we have a strong foundation for B2B opportunities.

For instance, Sri Lanka’s contribution to the apparel industry is significant. Brandix, a Sri Lankan company, has created the Brandix Apparel City in Vizag, India, which is an entire village converted into an apparel manufacturing hub.

Do you think the startup industry will significantly impact the GDP in the coming years? How is the government supporting this growth?

Absolutely. The government is supporting the startup industry, and initiatives like the recent conference are a testament to that. There’s always the notion that the government can do more, and people will always feel that way in any country.

Personally, I believe in taking the initiative rather than waiting for the government to act. I’ve been fortunate to receive support from Sri Lankans living overseas, and we don’t heavily depend on the government. However, when the government organises events like this conference, they are very much involved.

Top ten verticals in Sri Lanka

How supportive is the corporate sector?

The corporate sector engages in some acceleration programmes and other supportive activities. However, I haven’t worked closely with the corporate segment in the last four to five years.

Our strategy has been to identify promising companies, help them set up in Singapore, build their products, and take them regionally from day one. Most of our network is now based in Singapore and its surrounding areas.

But does setting up in Singapore make sense for Sri Lanka from an economic point of view?

Absolutely. Dealing in dollars makes a lot of sense for many of these companies. Working with international clients brings significant value to the economy, as it generates foreign currency and allows employees to earn dollars or other foreign currencies.

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This strategy facilitates regional expansion much faster. Building a company is hard everywhere, be it in India, the US, or anywhere else. Despite the support from ecosystems, government, or private sector, it’s always challenging. So, if you’re going to play the game, it makes sense to aim for a bigger market. It’s like playing cricket; you can play on the streets, but aiming for the World Cup is where the real value lies.

Which Sri Lankan cities have the highest concentration of startups?

There are 885 startups spread across Sri Lanka. For this conference, we had startups from 18 or 19 out of the 25 districts in the country. We selected the 50 best startups from about 1,000 companies, and they came from various regions.

Colombo is the primary hub, much like Bangalore or Mumbai in India. The second largest city with a growing startup presence is Jaffna, close to Kerala. However, great companies can emerge from anywhere, even in areas without a robust ecosystem.

For example, we’ve invested in companies from Kuliyapitiya and Bandarawela, both of which are far from Colombo and lack established ecosystems.

In an article, you mentioned there is a need for local founders to develop sales acumen. What initiatives are you undertaking to address this gap?

With our portfolio companies, we work closely with the Sri Lankan diaspora, particularly those who left in the 1970s and 1980s and are now our investors. We connect these investors (LPs) with our portfolio companies to share their knowledge and expertise. We also run curated workshops specifically for our portfolio companies.

For instance, we focus on the fintech market, helping companies understand how to sell products to banks and telcos, which are the major customers. This approach helps build in-house knowledge and sales acumen essential for engaging with these large clients.

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Image Credit: nVentures.

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