SL ranked second among 250 global start-up ecosystems for affordable talent

• Average salary of Lankan software engineer is US $ 3,000, against global average of US $ 42,100
• SL among top 20 global start-up ecosystems for ‘Bang for Buck’ 

Sri Lanka is ranked second among 250 global start-up ecosystems for affordable talent, securing the top spot in the Asia Pacific region, according to the 2020 Global Startup Ecosystem Report (GSER) by Startup Genome and the Global Entrepreneurship Network.

According to the report, the average salary of a software engineer in Sri Lanka amounts to US $ 3,000 while the global average stands at US $ 42,100, making Sri Lanka an attractive destination in terms of affordable talent. 

The GSER has also ranked Sri Lanka among the top 20 global start-up ecosystems for ‘Bang for Buck’ (value for money).

In addition, the report also identified the Sri Lankan government’s support for technology companies as another reasons for start-ups to flourish in the country. 

“The Sri Lankan government introduced zero percent tax on IT companies. Spiralation is a government-run funding programme that offers seed capital to early-stage tech start-ups, with 70 companies funded to date,” the report stated. 

Sri Lanka’s start-up ecosystem value has more than quadrupled from Rs.5.4 billion to Rs.21.8 billion in the past two years, according to Information and Communication Technology Agency of Sri Lanka (ICTA) Chairman Jayantha De Silva.  “Over the past decade, regional VCs, foreign investors and other parties have made significant investments into tech start-ups.

With this backdrop, we’re excited to launch Sri Lanka’s first Angel Fund to further support the growing ecosystem,” Lankan Angel Network Chairman Mano Sekaram noted.  The report also identified the strong potential of Sri Lankan start-ups in the e-commerce and fintech sectors. The annual domestic e-commerce sales and services are estimated to be at US $ 40 million and expected to grow to US $ 400 million by 2022.  It noted that the acquisition of wow.lk by Dialog Axiata Group in 2015 was instrumental in establishing Sri Lanka’s e-commerce presence.  The recent partnership between Dialog Axiata Group and Alibaba’s Daraz is also expected to increase access to affordable e-commerce in the country, according to the report. 

Further, PickMe, the local ride-hailing firm, was also able to raise US $ 2.5 million from International Finance Corporation (IFC) in 2018. The report also acknowledged the supportive role of the Central Bank in fintech developments, noting the recent launch of the fintech regulatory sandbox by the financial sector regulator.  Further, it went on to note that fintech start-ups have also found a new wave of support with the launch of HatchX, which is Sri Lanka’s first fintech accelerator and the first virtual accelerator in South Asia. The accelerator was launched in April 2020 and is an initiative by Hatch in partnership with the Lankan Angel Network. 

Notable start-ups across segments include payment gateway PayHere, which has the largest customer base in the ecosystem, with more than 1,600 active merchants and Helios, a peer-to-peer lending platform, which raised a second round of funding from the John Keells X Accelerator in 2019.

“The COVID-19 pandemic expedited consumer adoption of e-commerce out of necessity. PayHere recorded a remarkable 4x growth on daily payments processed for local e-commerce businesses. This shift in consumer behaviour has now convinced traditional businesses to move online,” PayHere CEO Dhanika Perera said. The ICTA engaged Startup Genome to benchmark Sri Lanka’s performance against more than 250 start-up ecosystems globally for the GSER.