Paing Hein Htet is a startup enthusiast and ecosystem builder from Myanmar. Paing has been working with innovators and startups across Myanmar for eight years, first by running fashion commerce and artificial intelligence startups, then through work in digital service design, and now as an investor. We recently spoke to Paing on strengthening digital ecosystems, the current state of entrepreneurial communities in Southeast Asia, and much more. This is an excerpt from that interview.

Q: Hi Paing! First, tell our audience about yourself.

A: “I tend to see myself as an ecosystem builder who has been on both sides of the table—I invest and build startups, and I have an educational background in poverty and development. This puts me in a position where I can work across multiple disciplines and understand the holistic aspect of ecosystem building because it’s never a singular, linear experience.”

InnovationBus2.JPGIn Taunggyi, the third-largest city, Paing helped train crowds of university students to improve their entrepreneurship and digital skills.

Myanmar’s digital ecosystem experience unprecedented growth in 2014. What was your experience with the digital ecosystem during that time, and what did you see from the inside?

“I was fortunate to witness the growth firsthand. A fair comparison would be what we currently see in Cambodia and the Pacific Islands, where the internet and digital penetration increased rapidly within a short timeframe. In Myanmar, before 2012-2013, a sim card was $1,500. With the liberalization of the telecom sector in 2014, the sim card price went down to $1-2. Next, the country moved from almost no penetration to 20 to 30 million people having mobile and internet coverage within two to three years.

“The growth cycle could be divided into three segments: booming, drawback, and maturity. I witnessed these phases physically through my involvement in the Phandeeyar space—a local tech hub that emerged in 2014.

Booming: In the early days, opportunities seemed limitless, and the population and foreign interests were drawn in. Simultaneously, startups like mine were visiting Phandeeyar, where big names from the tech industry in the region would regularly visit and deliver seminars. The audience was young, excited and everyone seemed to be building something.

Drawback: After a few years, the growth slowed. In 2017, there were around 150-200 active startups—that number did not increase much by 2019. One compelling hypothesis is that it’s challenging to build startups in a booming ecosystem and that this challenge results in a high churn rate. In Phandeeyar’s space, the slowdown resulted in fewer newcomers with already close-knit communities.

Maturity: In late 2019, the startup scene was dominated by more established startups, experienced entrepreneurs, and “startups” with backing from notable brands. Interest from development finance institutions and private equity and venture capital firms brought $300 million in investments to accelerate the startups and businesses for the following 10 years.

“These developments need to be complemented by focusing on digital literacy, security, and rights. As the digital economy exploded, it was critical to ensure civic communities were empowered and connected to enable positive development for all.”

Many entrepreneurial communities across Southeast Asia suffered setbacks during the pandemic. How did it work in Myanmar?

“I remember early 2020 clearly; I was wrapping up the Mandalay Business Challenge. Little did I know that would be the last sizeable physical event that I would lead for a while. This was also around the same time when Food Panda [the delivery startup] launched its operations in Myanmar. Once COVID hit, the entrepreneurial communities shifted into a new landscape. On the one hand, we had major players like Telco and Wave Money [a bank-backed tech giant and mobile money lender] negotiating for a $76 million round of investment—similar to Wing in Cambodia.”

BusinessChallenge-c142e7.jpgPaing participated in a Business Challenge in Mandalay, Myanmar’s second-largest city, to help entrepreneurs refine their financial models and business plans.

“On the other hand, less fortunate startups closed because their business models focused on in-person activities. The entrepreneurial community was paralyzed during the onset of the pandemic, but after a few months, entrepreneurs quickly adopted a new way to do business and survive. With support from development finance institutions, the government was planning to take steps to accelerate the digital ecosystem. Businesses were identifying new ways to do work and end-users were leapfrogging digital technology for a second time.”

So, what specific startups have been most successful in the last two years? What contributed to that success?

“Over the last two years, most successful startups progressed either because their fundamentals are strong or they were in the right sector. Major platforms and digital players backed by telcos and regional players [Wave Money, Food Panda, Grab, KBZ Pay,] thrived. Simultaneously, in Myanmar, organic startups like Kyarlay—e-commerce for baby products, CarsDB—a car listing platform, and BetterHR—started to grow. From a market fundamentals position, these startups were in a necessity segment, sustaining the demand from the consumers. With conservative business planning and cash flow scrutiny, these startups could maintain a runway that would allow them to keep operating while giving them room to experiment and grow.”

I talk to people a lot about effectively supporting the growth of inclusive digital economies. What advice do you have for development partners who want to support digital ecosystems like the one you see in Myanmar? What is working?

“Consistency and sustainability of initiatives are critical. Entrepreneurship is still a risky task with a long timeframe to achieve results. Only through capital investment that focuses on longer-term gains, trial-and-error, and a localized support approach will we see substantial progress.

“Suppose there is a practical, success-focused narrative. In that case, actors across the digital ecosystem can learn from each other, follow success stories, and create an enabling environment where the former successful founders or employees build new businesses that can further trigger a chain of successes.”

And on the flip side, what are the gaps you see right now? How could ecosystem supporters fill these gaps?

“Myanmar’s digital ecosystem is back to day one, where survival is the most important thing as of now. However, the responsibilities of running a business have heightened, and there is increased demand for responsible business, accountability, and adaptability. Post-pandemic, I encourage ecosystem supporters to look at the regional gaps rather than singular gaps in one country. Business operations have shifted dramatically, and border restrictions have changed since the pandemic. For example, a startup in Myanmar could have a technical team based in Bangkok and serve customers in Sri Lanka. With more regional linkages and support to localizing lessons learned in new countries, development partners could be having a regional impact on a larger scale and contribute to the growth of individual digital economies at the same time. Finally, it is critical to support all the fundamental pillars of the ecosystem as it grows: digital rights, digital hygiene, and literacy.”