Oct 27, 2015 (LBO) – Building a tech ecosystem is crucial for a thriving IT sector, according to a Sri-Lankan born entrepreneur.
Manoj Ranaweera was a key architect behind the ecosystem put in place in Manchester between 2006 and 2013. Through 100 events he rallied together over 2,000 entrepreneurs, investors, deal makers and senior managers of large companies.
With the help of KPMG, TechCrunch and fellow tech entrepreneurs, Ranaweera held the first event in November 2006. Quarterly events grew to over 20 per year at their peak.
“In 2006, there were no tech entrepreneur events in Manchester. London was just starting up. I had nowhere to go to gain knowledge and speak to peers. So I started an event supported by KPMG,” Ranaweera said.
“I brought people together. Mixed up investors and entrepreneurs. A number of companies were born as a result including my own edocr, CANDDi, Intuitive Business Intelligence, Construqtive.”
Sri Lanka’s tech ecosystem is beginning to take shape mainly due to individuals who make it happen, he said.
“The focus has to be on tech entrepreneurship, not just about software coding. Hackathons are vital, but it’s the knowledge sharing by peers that matters.”
People behind the scene
Giving examples, Ranaweera said individuals like Jeevan Gnanam, a founder member of the Lanka Angel Network, supports entrepreneurs by providing venture capital and mentorship.
Sam de Silva runs Spike Colombo, an IT forum, once a month and readme.lk is a news and information portal that caters to the IT industry.
Sri Lankan Startup Founders Club by Rukmankan Sivaloganathan of Trekurious focuses on founder specific collaboration, Ranaweera said, while Tech Startup Meetup group is in the process of coming up with a meetup programme. This will be organised by Dinusha Kornkaduwa.
And online, Sri Lankan Tech Startups is a Facebook group started by Ranaweera with a thousand strong membership.
“What is missing is centrally based tech hubs, ideally close to Fort railway station, which helps tech entrepreneurs from outside Colombo travel easily. Orion City has been a great start, but there needs to be more,” he said.
Entrepreneur friendly government policies would go a long way to help boost the ecosystem, especially with tax benefits, he added.
Ranaweera is convinced Sri Lanka’s IT sector is showing rapid consolidation and a tech ecosystem is starting to take shape.
According to him there are four components for a self-thriving startup ecosystem: access to finance, knowledge, markets and talent.
A key challenge for Sri Lanka is getting the venture capital environment right with an approach around problem solving rather than profitability. Ranaweera believes once you become the dominant player, it becomes easier to work out how to generate profits. During early years, it’s important to compromise on profits for revenue growth.
“In early stage tech startups, profits are not something a western investor will focus on. The key focus is around the speed of growth and acquisition of market share. I believe most Sri Lankan investors focus early on profits. This makes them highly risk averse,” he said.
“It’s better to focus on a 10 year exit for investors than 3 to 5 years.”
Wealth is created by selling a product many times, in a tech startup, and achieving economies of scale which is not directly proportional to number of staff employed. Lack of risk capital hinders the growth of a tech ecosystem.
“I believe Sri Lankan angel network is attempting to solve this, but wider participation of investor community including initiatives such as crowd funding needs to be introduced.”
“In the US, fail fast culture is the norm. I’ve failed many times. If an entrepreneur can demonstrate she or he has learned from past failures, then this should not be treated as a risky investment.”
Comparing markets, Ranaweera said US startups, especially those based out of San Francisco, tend to get the best valuations due to large number of investors seeking out the best tech companies.
“When it comes to London, the valuations drop as the number of competing investors reduces. This comes further down when it gets to Manchester, and even further down when it comes to Sri Lanka,” he said.
This is a supply and demand market issue, as well as an issue about market knowledge and level of risk appetite.
Selling his 8-year startup
Ranaweera sold his 8 year old tech startup edocr.com to US-based Accusoft Inc this year. They were looking for rapid closure and it took about 3 months from initial approach to conclusion.
“My previous exit resulted in a number of face to face meetings. But this time, it was all done online via Skype and emails.”
“At the point of exit, we had not achieved our overall vision, so it was not an easy decision. My close network of tech entrepreneurs convinced me to exit, as I have already started my next tech company. I am glad I decided to exit, as Accusoft has great plans to make edocr a success story,” he added.
In other projects, Ranaweera helped a mature tech company spin out a new technology two years ago.
“At the end of 2014, I incorporated UnifiedVU to commercialise this technology. UnifiedVU allows information and functionality to be surfaced from legacy, on-premise, SaaS, data warehouses, web and Internet of Things (IoT) through Single Page Web Applications,” he said.
Once a workspace is populated with Single Page Web Applications, the Web Apps can listen to each other and respond. “We call this integration on the glass. This is a novel technology which will help organisations to achieve significant efficiencies,” he said.
Top Sri Lankan IT players
Commenting on the stars in the Sri Lankan IT sector Ranaweera said: “I’ve always been impressed with Creately, which has built a product that rivals Microsoft’s Visio. WS02 is without a doubt one of the leading tech companies in Sri Lanka.”
“I am a fan of Arunoda Susiripala. His latest creation is Kadira, which focus on a new technology called meteor. Takas is gaining market share in eCommerce. Whilst Kapruka is not a tech startup, Dulith Herath has built an amazing eCommerce company. He has also survived the longest.”
The exit of Millennium IT to the London Stock Exchange is one of the success stories, he added.
In terms of Sri Lankan IT links with other countries, Jeevan Gnanam and Lankan Angels have strong links with India, which has allowed tech startups such as Trekurious to expand its services to India.
“Storylize recently launched at TechCrunch Disrupt in San Francisco. Medical Joyworks went through an accelerator in South America. Vesses and number of others have offices in the US,” he said.
Manchester is hosting a large tech conference next year and Ranaweera is currently exploring whether Sri Lanka would be interested in sending a delegation to explore new markets as well as funding.