{"id":2348,"date":"2019-07-12T18:26:28","date_gmt":"2019-07-12T11:26:28","guid":{"rendered":"https:\/\/capitalcambodia.com\/?p=2348"},"modified":"2019-07-12T18:26:28","modified_gmt":"2019-07-12T11:26:28","slug":"young-start-ups-learn-grown-up-reality","status":"publish","type":"post","link":"https:\/\/capitalcambodia.com\/young-start-ups-learn-grown-up-reality\/","title":{"rendered":"Young start-ups learn grown-up reality"},"content":{"rendered":"

New guide helps entrepreneurs navigate the legal landscape\u00a0 \u00a0<\/em><\/p>\n

If there is one constant with technology start-ups, it is failure.<\/p>\n

The concept of \u201cserial entrepreneurs\u201d and the mantra of \u201cfail fast, fail often\u201d are embedded in the startup culture of Silicon Valley and slowly taking hold here. It was even a theme at the June 9 SmartStart awards, a nine-month innovator program for budding tech entrepreneurs.<\/p>\n

Speaking at the event, even National Bank of Cambodia Director-General Chea Serey emphasised risk-taking in reference to some of the biggest US tech companies that were founded by people who dropped out of college. \u201cIf you have a dream, follow it,\u201d she told the SmartStart group. \u201cI encourage you to take more risk. You are going to fail but you are going to learn.\u201d<\/p>\n

While most behind the push for more tech start-ups in Cambodia agree that it is sound advice, what often goes missing legal experts say, is the idea of being legally prepared to crash so you can get back up. Start-ups, they say, also need to know how to attract investors and that requires having their legal house in order.<\/p>\n

\u201cStart-ups need to take the law seriously,\u201d says David Haskel, director at Abacus IP, a Cambodian trademark, patent and intellectual property (IP) agency. He is also the director of Cambodia StartUp Advisers (CSA). \u201cThey can get away with doing things informally, until they can\u2019t.\u201d<\/p>\n

For that reason, Haskel says, CSA recently released the Cambodia Start-up Handbook, a guide to helping start-up founders navigate the legal landscape and such issues as incorporation, labour law, start-up finance, tax basics and incentives, and a full range of topics on intellectual property.<\/p>\n

CSA is an alliance of legal, tax and intellectual property advisory firms. The book deals with systematic approaches for all stakeholders to develop the Cambodian digital economy. \u201cToo many founders in Cambodia waste too much time figuring out basic things like setting up their companies or paying taxes,\u201d Haskel says.<\/p>\n

It is Cambodia\u2019s first publication that addresses legal, tax and intellectual property issues for startups and also features an analysis of relevant laws and current practices.<\/p>\n

\u201cThe growth model of start-up differs from that of other businesses in their need to raise successive rounds of capital,\u201d Haskel says. \u201cWhile a traditional business might be able to raise what it needs from friends, family or investors who don\u2019t ask too many questions, a start-up will likely need to go to institutional investors, such as venture capital funds, seed funds, accelerators, and angels, who will be asking questions during due diligence.\u201d<\/p>\n

Starting from ground zero<\/strong><\/p>\n

If start-ups in Cambodia are just now learning what they need to know about navigating the legal framework, advisors say it is better to learn it now while the industry is so small.<\/p>\n

No Cambodia start-up has registered a patent yet. Infringement fights are still not on the radar.<\/p>\n

\u201cWe are almost starting from ground zero in terms of legal obligations,\u201d says Clint O\u2019Connell, a partner at DFDL, an international law firm with offices in nine Southeast Asian countries.<\/p>\n

For now, raising capital is the priority. O\u2019Connell says there is no shortage of funding but no one is going to give it to you \u201cunless you have a strong business plan\u201d.<\/p>\n

Problems and priorities<\/strong><\/p>\n

Cambodia is a signatory of many international intellectual property treaties, and bilateral deals that involve IP.<\/p>\n

\u201cThe laws are largely in place and up to international norms, the problem is one of enforcement and the legal system more broadly,\u201d Haskel says.<\/p>\n

Trademark law is by far the most developed, with infringement cases being handled through mediation with the Ministry of Commerce, and the courts.<\/p>\n

The patent system is really just getting going, with the first patents being granted in the past few years, almost all going to foreign applicants.<\/p>\n

\u201cIt will be some time before we see patent infringement cases regularly handled in courts; to my knowledge, there have yet to be any,\u201d Haskel says.<\/p>\n

For now, that is not a major issue simply because, despite the government pushing for more ICT education and development, the startup industry is still very small.<\/p>\n

\u201cFrom what I have seen, very few startups in Cambodia have patentable technology,\u201d Haskel says. \u201cTo obtain a patent, the invention must be new compared with what is known throughout the world. Most startups here are localising or tailoring a service to the local market, rather than researching and developing a new technology.\u201d<\/p>\n

He says that should not be taken as a critique. \u201cThere is a real benefit from such localisation to society, and can be a great business model,\u201d he says.<\/p>\n

For Cambodian start-ups the first priority will be trademarks, selecting and protecting a brand that will help their business succeed. As Cambodia is a first-to-file system, unless they have a registered trademark, they are largely out of luck should someone infringe their brand. Anecdotally, many founders understanding of trademarks could be better \u2013 with some choosing a name that can never be registered, and too many never bothering to register at all.<\/p>\n

It is these types of issues that folks like Haskel are trying to change.<\/p>\n

\u201cThe goal needs to be to build not just a great product or service, but an investible company. That requires the legal side to be in order,\u201d Haskel says.<\/p>\n","protected":false},"excerpt":{"rendered":"

If there is one constant with technology start-ups, it is failure.<\/p>\n","protected":false},"author":1,"featured_media":2350,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_FSMCFIC_featured_image_caption":"CSA Director David Haskel says tech companies need to get theirlegal house in order. 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