EY joins UBLC to help strengthen Lankan start-up eco system

The COVID-19 pandemic threatens to push more than one billion people into poverty world over, and millions of people have had their education, or their careers put on hold. Promotion of entrepreneurship – a key to drive the economy of a country. 

Amongst many initiatives to support the expansion of the startup ecosystem in Sri Lanka, the catalyst that drives Sri Lanka’s digital economy, the Information Communication Technology Agency of Sri Lanka (ICTA) recently announced its Digital Economy Strategy. Its mission – to increase the number of tech and tech-infused startups in the country over the coming few years. The key is to build a ‘profound startup ecosystem in the country’ and incubators and accelerators would indeed need to play a critical role in this ecosystem. 

Helping entrepreneurs launch, grow and scale businesses, EY people endured on their journey to support the ‘University Business Linkage Cell’ (UBLC) to help instil knowledge on the fundamental of doing business particularly, in the domain of financial management amongst the young Lankan start-ups. 

UBLC program in Sri Lanka was initiated by the Government of Sri Lanka (GOSL) with an aim of transforming the universities from its traditional ‘teaching – research function’ to innovation, product development and commercialisation through the UGC circular 2016/10 which directed the universities to establish what is today, called a University Business Linkage Cell (UBLC). The GOSL received a soft loan from the World Bank to fund the UBLCs established in all state universities for a stipulated period. The World Bank extended its support by way of also providing training for UBLC staff on various matters such as patenting, industrial law, technology evaluation, and technology transfer. 

The purpose of the UBLCs is to help the university students and staff to bring their research output to the process of commercialisation.

The ‘Enterprise’ of University of Moratuwa at the outset was an already bred system which catered to a similar purpose, established prior to the 2016/10 circular. With the circular, the University of Moratuwa took bold steps to accelerate the development of the Enterprise as UBLC. Particularly in 2019, amidst Easter bombing, and COVID-19 pandemic, UBLC has been on a steady development in all fronts: Patent process, startup fostering, technology licensing, and networking.

UBLC-UoM also has a process to identify potential startups of students and staff and foster them at the product accelerator for two years providing all the services for them to develop and spin out as successful companies. Startups receive mentoring on entrepreneurship, business development, market identification, financial handling, human resource management, branding and marketing. 

At present, there are startups engaged in developing high-tech, commercially viable products including, vision-based adaptive traffic control, electric vehicles, drones, educational robot kits, diabetic insole, and an elephant tracking collar. These products will be introduced to the local and global markets in 2021. 

Ernst & Young, Sri Lanka Partner Tax Sulaiman Nishtar stated, “In general startups pay less attention to the commercial aspects of business and often lack insights in areas such as validating the commercial proposition, basic financial hygiene factors and suitable structuring. Economies like ours need these innovative ideas and products to be commercialised successfully in a sustainable way benefiting all stakeholders. Failure to do this would drain a lot of our resources affecting the whole start up ecosystem. Our association with UBLC-UoM, as an advisor, is to share our knowledge and expertise to encourage the innovative talent displayed by these young budding entrepreneurs. It is indeed a privilege to be able to bring about an impact to create a more profound startup ecosystem for Sri Lanka.”

EY teams carried out a knowledge sharing session with an objective of providing education on ‘Fundamental considerations of Accounting, Bookkeeping, Company Incorporation, Tax and Audit’ to the staff of the UBLC-UoM incubator and the members of startups within the incubator with another session on Finance and Valuation to be followed. Knowledge in these fundamentals will help young startups avoid some of the most common mistakes and help to navigate around some of the entrepreneurial pitfalls that startups would likely to encounter.

Ernst & Young, Sri Lanka Accounting Compliance and Reporting/Payroll Operate Principal Praveen Ruberu commenting on the engagement stated, “It was a privilege and motivating in so many ways to witness the innovations of the Sri Lankan technopreneurs of the University of Moratuwa – Startup Incubator, with their unique innovations done with such passion and dedication.” 

Ruberu further stated, “Sri Lanka has some excellent tech innovators who could create disruptive tech startups. We at EY have had the privilege of working closely with a similar startup from its early days – nCinga, a SaaS startup, which got acquired in a $ 15.5 million deal late last year. It was a pleasure helping the team on Accounting Compliance and Reporting, and Payroll related matters, allowing them to focus on product innovation and executives focus on their core business strategy. 

“Further we are currently assisting another AgroTech startup Agrithmics Ltd. in their accounting and related areas, whilst help enabling them to focus on their core business and tech innovation. Likewise, it’s been a pleasure sharing knowledge with the startups at the incubator of the University of Moratuwa and we really hope some of these startups would one day emulate the success of startups such nCinga or kick off steadily and positively as Agrithmics.” The EY Resource personnel included, Sulaiman Nishtar, Partner – Tax, Ernst & Young, Sri Lanka, Praveen Ruberu, Principle, TAX, Accounting Compliance and Reporting/Payroll Operate, Ernst & Young, Sri Lanka, Rajeev De Silva, Partner, Assurance, Ernst & Young, Sri Lanka, Lahiru Karunathilaka, Senior Director, Strategy and Transaction, Ernst & Young, Sri Lanka and Yasith Fernando, Senior Manager, Consulting, Ernst & Young, Sri Lanka.  UBLC-UoM Director Prof. Rohan Munasinghe commenting on this initiative stated, “All our startup groups are engineering students and past graduates who may lack knowledge and skills in running startup companies and handling finances. On our request, EY generously accepted to be our ally and bring that missing expertise to our eco-system. They engaged with our startup groups interactively and mentored them on good practices. Their presence and knowledge transfer helped build confidence of our young startup groups. It is yet the beginning, UBLC-UoM is anchored in a long-term goal and is committed to harnessing and disseminating knowledge and services to help build a stronger entrepreneurial ecosystem for Sri Lanka.”

A successful startup can create value for all stakeholders involved and contribute to the digital economy of Sri Lanka. This is a journey which requires expertise on validation of business models, market assessments, strategising for growth, assessment of initial capital requirements, choosing the correct funding models, managing working capital and carrying out regulatory and compliance related tasks. Startups usually don’t have a lot of expertise and experience in these areas as compared to established businesses, and EY teams have supported many beginners across the world helping them to make their journey smoother by avoiding unforeseen risks and setbacks due to any such oversights within these focuses.