Tech Entrepreneurship is Brewing Up in Kathmandu, Nepal

Roshan Karki is a cancer researcher and one of the scientist advocates of Science Exchange Inc, an online marketplace for scientific services. He is passionate about disseminating the importance of science, technology, and innovation in developing nations. Roshan currently lives and works in Connecticut, USA. You can follow him on Twitter: @Roshancarkey

Mount Everest, the highest peak on earth, lies in Nepal. (Image credit: Wikipedia)

Paul Graham, co-founder of Y-combinator, a premier seed capital firm in Silicon Valley, notes in his essay, “The way to get startup ideas is not to try to think of startup ideas. It’s to look for problems.”

In this context, developing nations like Nepal offer innumerable opportunities. Flanked between two burgeoning economies, India and China, Nepal is a country with about 27 million in population, in transition with myriad political, social, economic challenges. The capital, Kathmandu (KTM), a major cultural and tourist hub, is marred by daily strikes, traffic disruptions, and scant supply of electricity and water.

Entrepreneurship here is not only a difficult proposition but also a novelty, garnering little public support and barely visible in any discourse. Culturally, starting your own enterprise, which isn’t risk-averse, is strongly discouraged and it’s implicitly understood that new ventures are best executed by already-successful businessmen.

Moreover, aspiring entrepreneurs may be viewed with suspicion, their ideas mocked, and their potential enterprise crushed long before its inception. Families can be particularly unforgiving of failures and unsupportive of ventures that require investment, incur financial loss, or face logistical issues during infancy.

The lack of organized venture capital firms, the reluctance of banks to issue loans to startup companies (unless putting up property as collateral), and apathy from the government are among the main challenges. These culminating dilemmas often compel aspiring entrepreneurs to give up on their ventures and seek safer working routes in banks or NGOs – deemed the most respectable avenues of business by Nepalese society.

Needing business oxygen

Despite all the aforementioned challenges, entrepreneurial spirit has been brewing steadily in Kathmandu, with a recent surge of online enterprises. This can be attributed to several factors: an increased literacy rate and a growing young population in the country; unprecedented access to faster internet, communication tools, and information technology; increased presence of returnees from abroad with creative ideas and risk-bearing attitudes; and the ease of remote collaboration among like-minded individuals around the world.

A quick review of recent startup companies in Kathmandu suggests that young entrepreneurs are either implementing ideas that are seemingly saturated in western markets but with a growth potential in Nepal, or simply coming up with innovative solutions in response to daily inefficiencies they encounter. While these companies are resilient to adverse technical and social challenges, the primary concern of long-term financial security remains, with the majority of companies run on personal or family funding.

To this end, the recent formation of Business Oxygen (BO2), a $14 million small and medium enterprise (SME) venture fund, initiated by the International Finance Corporation (IFC) and managed by the Bank of Kathmandu (BOK) and Beed Management Firm, is an encouraging step – although the fund is directed at growing businesses that are at least two years old.

Nevertheless, the fund aims to provide equity investment, risk capital, and advisory services to SMEs alleviating the financial burden of startups while channeling the focus of entrepreneurs to strategize on the company’s growth. The venture has identified key sectors in Nepal like agriculture, health, information technology, and renewable energy that will play vital roles in the country’s immediate development.

Certainly, the change of attitude towards entrepreneurship in a traditional society like Nepal will not occur overnight, but it is critical that government, educational institutions, and the civil society encourage entrepreneurship among youngsters, improve financial and investment regulations, and educate the public on the importance of innovation to impact progress of any society, a lesson also to be learned from our burgeoning neighbors. And as young entrepreneurs grow and address small inefficiencies today, it is inevitable, sooner than later; they will be able to take on the country’s bigger political, social, and economic challenges.

5 Nepali startups to watch