Boost for Sri Lanka from Global Startup Ecosystem Report 2024

Tuesday, 11 June 2024 01:43 -     - {{hitsCtrl.values.hits}}

  • Ranked within world’s top 10 for affordable talent; within top 30 in Asia in talent and experience and top 35 in Asia for funding 
  • Cites access to talent, startup-friendly environment and supportive community as reasons to move startups to Sri Lanka 
  • Sri Lanka’s sub-sector strengths include fintech, govtech and agtech and new food
  • Total venture capital funding between 2019 and 2023 at $ 104 m
  • State Minister of Technology  Kanaka Herath says Sri Lanka poised to grow to a $ 15 b 
  • digital economy by 2030

Sri Lanka has got a boost in the latest Global Startup Ecosystem Report (GSER) compiled by Startup Genome, the world-leading innovation ecosystem development organisation and the Global Entrepreneurship Network (GEN).

Though not figuring in either of the global top list or emerging rankings prominently, Sri Lanka’s nascent startup ecosystem has got positive reviews. 

Sri Lanka was ranked within the world’s top 10 for affordable talent and within top 30 in Asia in talent and experience and Top 35 in Asia for funding. According to the report, reasons to move startups to Sri Lanka include access to talent, startup-friendly environment and supportive community.

Silicon Valley remains at the top in the GSER 2024, followed by New York City and London tied for #2. In Asia the best ecosystem for startups is Singapore followed by Beijing, Seoul, Tokyo and Shanghai.Bengaluru-Karnataka, India is ranked sixth followed by Delhi and Shenzhen, Hangzhou and Mumbai in Asia’s top 10.

Sri Lanka was also among select Asian countries whose ecosystems were highlighted. Apart from those in the Top 10, Kerala, Kuala Lumpur, Manila, Tamil Nadu and Telangana were featured. Madrid moved up 12 ranks, claiming to #1 in the Emerging Ecosystems Ranking.

Launched in London Tech Week yesterday, the report is in collaboration with the Founders Forum, Informa Tech and London and Partners. The GSER analyses data from over 4.5 million companies across over 300 entrepreneurial innovation ecosystems and features rankings that indicate which ecosystems are currently driving innovation and deep knowledge about startup trends around the world.

Profiling the country, the GSER said Sri Lanka boasts a resilient mind-set, with problem solving and innovation driven by entrepreneurial activity. The ecosystem attracts global, multilateral investors including VCs, corporations, and angel investors, including early-stage VC nVentures, which funded four startups in 2023. The DigiEcon Global Investment Summit 2024, in partnership with MasterCard, The United Nations Economic and Social Commission for Asia and the Pacific, and the Bill and Melinda Gates Foundation (BMGF), serves as a gateway to Sri Lanka’s digital investment ecosystem.

In November, Sri Lanka hosted Global Entrepreneurship Week, where it placed seventh on the leaderboard. The ecosystem’s 872 startups build a tech industry supported by numerous initiatives, agencies, and organisations. AccelerateHER, from Hatch and the US Department of State, is Sri Lanka’s first accelerator for female founders. The Information and Communication Technology Agency of Sri Lanka’s Suhuruliya 2.0 National Strategy aims to enable ten thousand female entrepreneurs with digital technology and access to the international market. By 2026, the program aims to make 50% of women in Sri Lanka active contributors to the national economy.

GSER also said Sri Lanka is undergoing a wide digital transformation. In January 2024, grassroots organisation Sarvodaya partnered with entrepreneurship developer Hatch to launch the GoviLab AgriTech Accelerator, a key piece of Sri Lanka’s Inclusive Digital Agriculture Transformation Strategy. The national initiative is supported by collaborative efforts of the government and the accelerator and investor BMGF, with support from PwC India. The National Digital Economy Strategy 2030 is a roadmap to create a high-revenue economy through digital transformation. In 2023, President Ranil Wickremesinghe committed to forming a presidential AI task force to promote AI usage.

The report quoted State Minister of Technology Kanaka Herath as saying, “Sri Lanka is poised to grow to a $ 15 billion digital economy by 2030, fuelled by a Digital and AI Strategy inviting global investors to partner with us in our journey.”

According to the report, Sri Lanka’s sub-sector strengths include fintech, govtech and agtech and new food.

In January 2024, Accelerating Asia Ventures’ Cohort 9, including shopping aggregator Mintpay, pitched their startup to global investors. nVentures supports Fintech startups including Mintpay, SmartCOOP, and Simplebooks.

In October 2023, Alipay+ and LankaPay signed an MOU to enhance inbound and outbound cross-border digital payments, allowing users of Asian e-wallets from the region to use cashless payments in Sri Lanka. In February 2024, the first UPI transaction was completed. BankTech Asia 2024 took place in Sri Lanka in March. 

The Government has prioritised digitalisation through public infrastructure and digital public goods. Digital submission, signatures, and payments cut processing time by 93%, and QR codes for international customs enable verification. The Government developed an epayment gateway and digital registration portal. Digital Government forms allow citizens to complete forms and receive services online. The Digital Health Blueprint enabled more than 85 hospitals to digitise medical records and care. The National Capacity Building Workshop was held in June 2023 to propel Sri Lanka’s journey towards digital government transformation.

In 2023, BMGF committed $ 343,250 for water research and announced it will establish agriculture data systems in Sri Lanka, strengthening digital public infrastructure and climate expertise. The Business Research and Development (BREAD) Centre provides state support for AgTech startups. Catalyst Good Life X’s Road to Regen accelerator strengthens the regenerative organic agriculture ecosystem in Sri Lanka. In January 2024, Sri Lanka became a producer of mint oil for NASA as part of its small-scale farming plans for extended lunar exploration and long missions to Mars.

The GSER said Sri Lanka’s tech talent pool is known for high-end product engineering experience, problem solving skills, and ingenuity. Around 5,000 tech students graduate annually. The Industry Reconnaissance and Engagement Program is a 15-week module offering students a comprehensive understanding of IT-related businesses. Up-skilling and placement for the Digital Economy is a six-month program for non-IT graduates and vocational students seeking careers in the Digital Economy.

Sri Lanka’s position leverages 180 degrees of opportunity from MENA to SEA. Electronic Travel Authorisation visas can be extended for up to 270 days and Colombo Port City provisions introduced in 2023 allow tax exemptions and incentives for businesses. Long-term visa programs are available for foreign investors. Sri Lanka holds free trade agreements with India and Pakistan, allowing for ease of global expansion. Sri Lanka’s transparent regulatory frameworks provide stable foreign investment security.

The report also acknowledges Sri Lanka has a wide network of startup and corporate support. Startup SL has supported 867 startups and 28 ecosystem partners and aims to generate 10,000 employment opportunities and connect 1,000 startups by year-end 2024. The Stanford Seed Transformation Program fassists Sri Lanka founders to scale. The MJF Charitable Foundation Small Entrepreneur Programme has supported over 2,000 entrepreneurs from less fortunate communities and entrepreneurs with disabilities.

Among key ecosystem players mentioned are BOV Capital, Hatch Works, John Keells X, Lankan Angel Network, Yarl IT Hub, nVentures. The ICT Agency is a member of the Startup Genome.

Total venture capital funding between 2019 and 2023 was put at $ 104 million as against the global average of $ 4.6 billion. Total early-stage funding 2021 H2 and 2023 was $ 11 million versus global average of $ 655 million. Median seed round put at $80,000 as against global average of $985,000. The median series A round value is $200,000 versus global average of $7.5 million. Ecosystem›s value growth is 3% versus global average of 46%.

The 2024 edition provides guidance to public and private leaders on how to foster thriving startup communities — the #1 engine of job creation and economic growth. Discover how 140 entrepreneurial ecosystems across the world stack up and view the full report here: