The idea of angel investment, venture capital and incubation are new concepts in our country. Since the concepts are new to us, companies also need to be at the right level to collaborate wit

Niraj Khanal is the CEO and Co-founder of Antarprerana, a private company that supports entrepreneurs of Nepal through investment and mentorship. Khanal, a person with optimistic outlook of the entrepreneurial ecosystem of Nepal, also currently serves as a Member of Start-up Development Committee under the Ministry of Industry, Government of Nepal. Khanal is a visiting lecturer to local MBA students on entrepreneurship. In addition, he also provides coaching and training for established and aspiring entrepreneurs. Business 360º talked to Khanal to learn about the present entrepreneurial ecosystem and the prospects and challenges for young entrepreneurs and start-ups. Excerpts:

What is your overview of the entrepreneurial ecosystem in Nepal?

What we need to understand first is ‘Rome was not built in a day’. The pace and direction at which we are moving is really appealing. Where we were five years ago and where we are now clearly speaks for itself. The trend is improving. There are various stages to consider. If you have to judge the entrepreneurship ecosystem, a lot of companies have already been successful in gathering seeds and growth funds. All stakeholders including the government are taking small yet positive steps towards developing the ecosystem.

How supportive or discouraging are the country’s laws and other fundamentals for young startups?

Till yesterday, our main concern was to have a Constitution. Today, since that is in place, the government is realising and acting towards developing a favourable situation for the overall entrepreneurial ecosystem. The alternative investment act by SEBON and the private sector showing huge interest in contributing towards the creation and development of the ecosystem are among other indicators of positivity. The transition from grants to impact investments from the development sectors also emphasise this aspect. There aren’t any concrete laws as such but we surely can be hopeful of having favourable laws in the near future.

Despite established businesses complaining about the deteriorating business environment, young startups seem to be making the news. How has this been possible?

I personally don’t feel that there are many hindrances. The environment is not deteriorating. It is just that the pace has slowed down a bit. There are various factors that affect a business environment. And these factors vary and differ from industry to industry. Therefore, understanding these industry specific and generic factors is very important. Factors like lack of knowledge about investment, mismatch of investors and business operators, credit crunch and so forth are major contributors for the slow growth of business. The overall positivity and the optimum sync between expected returns and actual returns is probably the most important factor for the success of young start-ups. Despite much debate on angel investment, venture capital, incubation, etc, young entrepreneurs and start ups are still far from access to finance. Your thoughts... The idea of angel investment, venture capital and incubation are new concepts in our country. There is a significant increase of stakeholders in these institutions. People are getting more knowledgeable and understanding the benefits of these business models. One major fact that we should not forget is that for any investor securing his investment is first priority. Since the concepts are new to us, companies also need to be at the right level to collaborate with these institutions. Right from compliance and regulatory aspects to strategy implementation, any company willing to collaborate with these institutions has to do their homework and be prepared at their end. Probably matching these technicalities is the only factor which is slowing down the pace.

Are there any success stories you can share?

If we are talking about producing products in the country and exporting, we have a couple of companies successfully doing it. If we are talking about raising funds globally and operating businesses in Nepal, then yes there are a handful of companies who are doing it. We are still in the process of framing and developing policies. Hence free flow of foreign investments or trade agreements is still a dream, but I would say a dream of the near future.

The Nepal government has established a start up fund some years ago. Has any start up benefitted with it?

Yes, the government has established the funds but since we lack basic policies and guidelines, we have not been able to utilise those funds properly. The latest trend and success of incubators and accelerator programmes do signify that with clear policies in place those funds can also be successfully utilised. The steps taken by the government, SEBON and private parties add more positivity and belief that these funds can be properly utilised.