This article is part of GEN's 2022 Global Entrepreneurship Week thought leadership series, featuring voices from around the world.
Following the end of three decades of conflict in Sri Lanka, the country’s first, and largest, network of business angels, was founded in 2010. Beginning its journey by funding and mentoring startups, the Lankan Angel Network (LAN) has since helped dozens of local startups scale both nationally and globally.
A group of prominent Sri Lankan entrepreneurs spearheaded this multi-year and multi-pronged initiative. Joining them, to aid in their mission of accelerating the local startup ecosystem, was the Indian Angel Network, one of LAN’s earliest supporters.
Before this, there was no seed or venture capital funding available at this magnitude, and local entrepreneurs could not raise the capital they so desperately needed for their ideas to scale. In its first three years alone, LAN raised over $2 million for more than 35 startups in Sri Lanka.
A land known for its ingenuity, and its smiles, Sri Lanka is a hidden gem among global entrepreneurial networks. Boasting a deep pool of technology and financial talent, the country has long proven to be an effective test market for larger economies like India, Bangladesh, Malaysia and Pakistan, with discounted valuations making Sri Lanka an attractive destination for venture investing.
Sri Lanka is additionally noteworthy for being a country that frequently shows some of the highest numbers of applicants turning out for Google’s Summer of Code. As well as the island’s beaches gaining popularity among international holiday makers, this same feature positively impacts Sri Lanka’s favorability with digital nomads, with the island consistently topping global rankings.
At the same time, the launch of Venture Engine in 2012, without doubt Sri Lanka’s largest such platform, has given a huge boost to entrepreneurial funding locally, benefiting the sector in an immeasurable number of ways. Growing from an inaugural cohort of more than 50 startups, Venture Engine, which recently celebrated its tenth year, has filtered over 1,500 startups to date, while also attracting venture funding to the tune of over $10mn distributed among over 35 startups. In fact, this program has proven so successful that it was recognized with the prestigious Asia Responsibility Award in 2016.
LAN has evolved from a network of angel investors, to having its own dedicated venture fund. In 2020, LAN launched the Angel Fund with more than 100 local and foreign angel investors investing Rs. 100Mn ($500,000). The fund has so far invested in five startups, while continuing to identify, evaluate and invest in additional candidates. The most recent additions to the Angel Fund portfolio, namely Mint Pay, MagicBit, and Chakra Suthra, are currently scaling thanks to the access to funding, as well as domain experts and mentors, delivered by LAN. They are scaling in spite of the many challenges thrown up by an ongoing economic crisis.
In the same way that gaps at seed- and early-stage funding were filled by LAN and the Angel Fund, shortcomings in the local VC space have been ably met by BOV Capital. Launched in 2015, and founded by Prajeeth Balasubramaniam and Rajan Anandan, BOV Capital features $13mn of assets under management. Having invested in 13 companies, with two exits (both to foreign tech companies), BOV Capital is currently administering its second fund, playing a critical role in bringing foreign investments into Sri Lanka, while catalyzing rapid growth for early-stage tech companies.
It is no surprise that the startup ecosystem in Sri Lanka has seen impressive growth in the past decade, especially considering the opportunities created by the country’s highly respected ecosystem partners. LAN has partnered with accelerators, incubators, and international angel networks, including the Asia Business Angels Network and the Global Entrepreneurship Network, as well as angel investors from around the world.
With a global mindset, resilient attitude and strong tech talent, Sri Lanka’s startup ecosystem will undoubtedly grow from strength to strength, ultimately becoming a dominant presence in South Asia.
Even though Sri Lanka is amid a major economic crisis, this is an opportunity for a new breed of innovative thinkers and problem solvers to shift the paradigm in every sector.
With unprecedented times being faced by Sri Lankan entrepreneurs today, LAN is doing its part by hosting “Innovate Lanka 2022”, which will support startups through funding and mentorships. Its winners will go on to participate in the Entrepreneurship World Cup. This initiative brings together startup and SME ecosystem partners including LAN, Council For Startups and Sri Lanka Association for Software Services Companies (SLASSCOM). It will also hopefully serve up the systematic change called for to rebuild our nation, by providing personalized support for every entrepreneur while offering a one-stop-shop for incubation and acceleration, until exit, at the global level.