The Realistic Optimist is a newsletter publishing exclusive opinion pieces from VCs and founders around the world.
About this op-ed’s author
Chalinda Abeykoon is currently a managing partner at nVentures, a Singapore-based seed fund focusing on B2B startups in South & Southeast Asia.
He worked for Sri Lanka’s ICT Agency as early as 2010, setting up the ecosystem’s foundations. He then worked for a startup accelerator led by Brandix, the country’s largest textile exporter.
In 2016, he became the CEO of Crowd Island, an equity-crowdfunding platform connecting the Sri Lankan diaspora to local startups. Additionally, Chalinda was the CEO of the Lankan Angel network and helped establish the first angel fund, attracting 100 angel investors from around the globe.
A quick chronology
Sri Lanka’s tech industry is about 35 years old. Its startup scene is less than half that age and can be divided into three distinct phases.
The first phase entailed shifting mentalities. Sri Lanka suffered from a bloody, three decades-long civil war that ended in 2009. Sri Lankan talent either left the country or pursued safe careers in law, medicine and large corporations. The risks associated with starting a company, let alone in the nascent tech industry, were deemed unjustified. The ecosystem’s pioneers had to convince the best and brightest that there was another way.
The second phase spanned from approximately 2014 to 2019. Local founders started realizing the potential technology held, the problems it could solve and the careers it could foster. That period saw local founders launch tech companies mostly aimed at specific Sri Lankan problems, without much thought given to international expansion. While laudable and useful, this all-in focus on Sri Lanka’s small domestic market (22 million people) hardly made these companies VC-investable.
The third and current phase marks a change in that aspect. Sri Lankan founders today better comprehend the mechanics surrounding VC funding, the need for scale and the recognition of Sri Lanka as a good test market, not the end-all be-all. Buoyed by remote work’s democratization, founders broke mental barriers and broadened their geographical scope. The ecosystem is expanding, with so-called “Tier II” cities such as Jaffna and Kandy mustering up their own startups.
The talent pool: sales sense & diaspora needed
Sri Lanka has more than proverbial “youth” and “human potential”. It has reservoirs of competent techies. The country’s tech talent works for the world’s largest corporations: Microsoft, Google, Intel, Oracle, HSBC.
These companies benefit from geographical arbitrage, hiring competent Sri Lankan tech talent for a fraction of what they cost at home. In 2020, the so-called “Business Process Outsourcing” industry raked in $971M and is projected to cross the billion dollar mark. An approximate 80,000 Sri Lankans are employed by it.