Amidst the economic turbulence that has engulfed Sri Lanka, a beacon of hope emerges. Hatch, co-founded by Brindha and Jeevan Gnanam and Nathan Sivagananathan, and its startup community have raised an impressive $1 million in 2023 (as of September). This achievement isn’t just a financial milestone, and $1 million is not much compared to other businesses – let alone sectors – in the economy. However, it embodies what it will take for Sri Lanka to change its economic fortunes. 

“We started this year with the ‘Troubled Nation to Startup Nation’ initiative,” said Brindha, recalling the origins of their journey. “In the last six to nine months, we’ve witnessed a resurgence in the startup ecosystem. Through problem-solving, these startups can offer solutions that have global relevance. That’s the essence of what Hatch has been supporting and advocating.”

 This resurgence is a testament to the nation’s potential, especially considering the preceding climate of limited investments. The spotlight isn’t merely on the monetary aspect, but on the message it sends: Sri Lanka can rise from its challenges, becoming a hub of innovation and entrepreneurial spirit.

 Addressing the broader picture and challenges startups face, Jeevan pointed out three key areas: “Having a good product, finding the right market, and access to funding. A lot of startups struggle to understand the problem they’re trying to solve. Hatch provides them with an ecosystem, connections in various countries, and helps them get the necessary funding.”

Brindha added, “There’s fear of investing in startups in Sri Lanka, especially among external investors. By showcasing successes, we aim to shift this perspective, emphasizing the wealth of talent Sri Lanka has to offer.”

The shift has started already.

The success stories under Hatch’s umbrella are diverse, ranging from local ingredient-based products with global appeal to tech solutions targeting universal problems. Startups like Hyperglade and Spectrify AI have already made strides overseas, reinforcing Jeevan’s stance that Sri Lanka’s market, though small, can make a global impact. “What we tell our startups from day one is to be global,” he emphasized. All eight startups – Rhoda, Meeedly, Feelo, Hyperglade, True by Tina, Miris by Islandmom, Spectrify AI, and Velv – have convinced investors that they have solutions that can go global, and according to Jeevan, investors expect annual returns above 20-30%!

Hyperglade is at the forefront of blockchain innovation, launching the world’s inaugural all-purpose blockchain utility platform. Their Beneficial Asset Ownership (BAO) model revolutionizes the ownership of both digital and physical assets. By leveraging a no-code platform, Hyperglade offers swift blockchain integration at reduced costs. Spanning sectors like Healthcare, Real Estate, and more, Hyperglade ensures transparent transactions while securely managing critical data.

Rhoda addresses modern commuting woes by reinventing e-bikes for millennials and Gen Z. The Rhoda AT, their flagship e-bicycle, is not just sustainable but also economically viable. With provisions to upgrade existing e-bikes with advanced tech, Rhoda makes e-mobility universally available, even offering rentals to democratize access.

Miris by Islandmom brings the fiery taste of NaiMiris (Sri Lankan Scotch Bonnet) to the global stage. Their range includes various hot sauces and the distinctive “NaiMiris Chili Jam.” Infused with the essence of Sri Lanka, Miris aims to become a recognizable name in the global hot sauce arena with its 100% natural chilli condiments.

Feelo strives to enrich lives by offering vouchers for delightful experiences in Sri Lanka, from gourmet meals to rejuvenating spa sessions. Not only do customers get value deals, but merchants also gain increased visibility and sales, creating a win-win ecosystem. 

Meeedly offers a transformative tool for online video conferencing platforms, such as Zoom and MS Teams. It provides real-time engagement analytics, using visuals and instant alerts, to enhance the digital interaction experience, especially for educators. True by Tina emerged from a new mother’s quest for functional yet stylish baby products. As Sri Lanka’s pioneer in silicone tableware and teethers, the brand merges purpose with community-driven initiatives and fair trade.

Spectrify AI is revolutionizing agricultural quality control through AI and spectroscopy. Its unique methodology and commitment to collaboration have made it a frontrunner in AI solutions that tackle intricate quality issues in the supply chain.

Lastly, Velv is optimizing team communication by enabling concise audio, video, and screen messages, eliminating the need for prolonged writing or meetings. Using AI, Velv guarantees impeccable transcriptions and offers multilingual support, championing a workspace that values both efficiency and inclusivity.

What will it take for Sri Lanka to reverse course, fix its fragile economy, bolster frayed structures and set the course towards sustainable, equitable growth? The system change everyone talks about is best exemplified by Sri Lankan startups led by founders who march to a different drum. Being a startup founder is a demanding role, requiring a blend of technical, financial, and interpersonal skills. 

Essential skills include the ability to sell and convey value, manage finances, communicate effectively, and deeply understand the domain in which they operate. Networking is crucial, as founders need to cultivate relationships beneficial to the startup’s growth. Strategic thinking, driven by data and analytics, is key, as is the ability to pivot and learn quickly from failures. Importantly, startup founders are characterized by their drive: they don’t rely on handouts or wait for favourable policies. They learn to fail fast, adapt and move forward. Passion, perseverance, and an unwavering belief in their vision also play a vital role in their journey. They are not driven by entitlement, they don’t expect coddling government support nor do they supplicate for exclusively favourable government policy.

Encouragingly, Sri Lanka’s startup ecosystem is making encouraging strides and the world is taking notice, The Global Startup Ecosystem Report (GSER) 2022 offers a glimpse into this evolution, highlighting the nation’s strengths, challenges, and the roadmap for its future.

Sri Lanka impressively ranks within the top five in the Global Ecosystem for the Affordable Talent category. Additionally, the nation places within the top 30 in the Asian Ecosystem for both funding and the Emerging Ecosystem in Talent and Experience. 

The GSER values the Sri Lankan startup sector at $228 million in 2022, marking a robust 72.7% increase from the previous year, with early-stage funding amounting to $12 million. Beyond the startup realm, Sri Lanka shines as a hotspot for digital nomads. It stands second only to Thailand, even surpassing Singapore, in Club Med’s 2021 list of top destinations for this global workforce. Complementing this, the 2021 digital nomad visa initiative further cemented its appeal to remote workers. Also, the government’s commitment to being energy self-sufficient by 2030 has fueled its strengths in the Cleantech sector. Agtech and new food sectors are also emerging as strongholds, bolstered by government initiatives.

Over the past decade, Sri Lanka has embarked on an inspiring journey in the startup realm. In 2012, the nascent scene was yet to catch the global eye, with only a few startups like WSO2, hSenid, and Virtusa making waves locally. But the winds began to shift by 2015. Sri Lanka made a grand entrance into the GSER, being recognized as Asia’s top emerging ecosystem and clinching the 11th spot globally. Potential growth sectors like fintech, edtech, and e-commerce were identified as the country’s strengths.

Fast forward to 2017, and Sri Lanka’s momentum showed no signs of slowing. Retaining its crown in Asia and its global position, the country saw a surge in early-stage funding by 50%, amassing USD 8 million. Compliments poured in, lauding the nation’s rich talent pool, commendable education system, and the appeal of its affordable living.

However, 2019 brought with it a set of challenges. External vulnerabilities, notably the heart-wrenching Easter Sunday attacks, saw the country’s ranking dip to the second spot in Asia and 15th on the global front. But as history has often shown, Sri Lanka is no stranger to resilience. By 2021, rising like a phoenix, the nation reclaimed its title as Asia’s leading emerging ecosystem, securing the 12th spot globally. Even the daunting challenges of the pandemic couldn’t deter Sri Lanka, which showcased its innovative prowess, particularly in the cleantech and tech sectors.

And then, 2022 marked a milestone year. Achieving its best-ever GSER ranking, Sri Lanka dazzled the world, asserting its stance in affordable talent and solidifying its stature among the titans of Asia’s startup ecosystems. Through highs and lows, Sri Lanka’s decade-long narrative in the startup domain is a testament to its enduring spirit and potential.

While the recent ascent in the global startup landscape is encouraging, several challenges persist. Firstly, in the realm of capital access, there’s a need to draw both local and international investments. The vast and skilled Sri Lankan diaspora, scattered across the globe, can serve as a goldmine of resources and networking. By tapping into this diaspora and exploring avenues like a venture debt market, the nation can potentially create a robust national innovation fund. 

Global connectivity is another crucial facet. Sri Lanka must not only foster but actively pursue international collaborations. By marking a presence in global events and shining a spotlight on its success tales, the country can position itself as an attractive hub for startups and investors alike. In fostering a culture of entrepreneurship, Sri Lanka should double down on its educational framework, ensuring it is aligned with the dynamic needs of the startup ecosystem. 

Promoting a culture where risk-taking is not shunned but celebrated, and where milestones, big or small, are acknowledged, can ignite the flames of entrepreneurship. Lastly, the pandemic has reshaped the business world. Sri Lanka must swiftly pivot, promoting digitalization across traditional sectors and expediting the transition to e-governance. As startups navigate this altered landscape, targeted support can enhance their adaptability and resilience.

Hatch is both an enabler and a beacon of a new Sri Lanka, a narrative of progression weaved by intrepid entrepreneurs leveraging technology. Established in 2018, Hatch isn’t merely a co-working environment but a cradle of creativity and innovation. Its foundation is laid upon the aspiration to transform the traditional economic narrative, seeding an ecosystem where innovators redefine societal and professional norms.

Situated in the bustling heart of Colombo, Hatch’s expansive 65,000+ sq ft workspace, adorned with over 1,000 seats, is an embodiment of dynamism. It is not just the physical space—equipped with cutting-edge facilities, meeting rooms, and a café—that makes Hatch illustrious, but also the intellectual ambience it fosters. Its walls echo with the symphony of ideation, each note articulated by deep thinkers, innovators, and disruptors, collaboratively weaving the tapestry of the next big technological and entrepreneurial frontier. Hatch isn’t confined to Colombo; its influence extends to Jaffna with a 2,500 sq ft space and plans to expand to several new locations, echoing its commitment to seeding startups island-wide.

Hatch also has Sri Lanka’s largest innovation and entrepreneurship support programme structure. Having completed 18 different incubators and accelerators in just the last 3 years with 292 startups directly participating and over 64 startups receiving some form of funding through these programs. Hatch’s total engagement number stands at an impressive 600+ startups through its different verticals. 

Its accolades are not just emblems of recognition but affirmations of its pivotal role in the subcontinental startup ecosystem. Triumphing over 18,000 global contenders to clinch the title of the best co-working space at the Global Startup Awards in 2021 marked a momentous milestone. Moreover, its feature in the esteemed Global Startup Ecosystem Report by Startup Genome, celebrated globally and across Asia for affordable talent, and leadership in cleantech and agtech sectors, accentuates Hatch’s global stature.

Programmes like ‘Kickass’ navigate early-stage startups through the intricate lanes of validation and development. ‘Green Energy Champion’ echoes Sri Lanka’s pledge to environmental sustainability, nurturing green transformations. ‘HatchX FinTech’ is a bridge connecting fintech startups to a world of opportunities, investments, and collaborations.

Every conversation, collaboration, and innovation within Hatch’s spaces is a step towards positioning Sri Lanka as an Asian nucleus of tech-led transformations. Beyond the accolades and the physical spaces, Hatch epitomizes an ethos of persistent innovation and collaborative progress. Each narrative woven, every milestone achieved, and every challenge surmounted within its spaces, underscores Hatch’s unwavering commitment to foster a culture where ideas transcend boundaries, and innovation is not just encouraged but is intrinsic to the national narrative. Incidentally, Hatch has forged a strategic partnership with the USAID Catalyze Sri Lanka Private Sector Development (PSD) Activity to assist startups in securing funding opportunities. Now, with USAID’s collaboration, Hatch aims to provide this assistance more extensively and sustainably.

Startups play a pivotal role in shaping modern economies, warranting the keen focus of policymakers. They are a nexus of innovation, often introducing novel solutions or opening up entirely new markets, which can either challenge established industries or cultivate new arenas for competition and innovation. Furthermore, they bolster the production of goods and services, catering to diverse consumer segments, and enhancing the efficacy and quality of production, thereby minimizing costs and waste.

From an employment perspective, startups pave the way for job creation, particularly in underserved sectors, simultaneously generating income for stakeholders ranging from founders and employees to investors. Moreover, their ability to attract diverse funding channels – be it from angel investors, venture capitalists, crowdfunding platforms, or government grants – underlines their growth potential.

Several studies and reports underscore the value of startups. The Progressive Policy Institute highlighted that in 2018, startups in the US were responsible for 2.9 million new jobs, constituting 40% of that year’s private sector job growth. Furthermore, these firms often demonstrate growth rates that significantly outpace their established counterparts. The World Bank draws a correlation between startup activity and GDP growth, noting a 0.5 percentage point increase in GDP per capita growth rate for every 10% surge in new businesses.

The importance of startups isn’t just economic – they also influence productivity by ushering in technological advancements and innovations. As suggested by the Kauffman Foundation, between 1977 and 2005, startups were the driving force behind nearly all net new job creation in the US, contributing to almost 20% of gross job creation. 

Moreover, these young companies are often at the forefront of social change. Startup Genome’s survey revealed that a staggering 75% of startups are actively working on solutions aligned with the United Nations’ Sustainable Development Goals, targeting areas like health, education, or climate change.

Reinforcing their integral role, an OECD report indicated that startups are crucial for driving digital transformation and fostering inclusivity. In 2018, they represented 42% of the value added by digital-intensive sectors and demonstrated a commendable inclination to employ a diverse workforce, including women, the youth, and immigrants.

For Jeevan and Brindha, the journey hasn’t been without challenges. Their steadfast dedication to the startup community is fuelled by an infectious entrepreneurial spirit and unwavering belief in Sri Lanka’s potential. Brindha’s words encapsulate this sentiment: “The story of the $1 million funding is about hope. We’re trying to drive economic recovery here,” she said. The significance of the funding is evident in the context of Sri Lanka defaulting on its debt and depending on an IMF lifeline and other multilateral donor support as it remains locked out of global capital markets until it completes a painful and drawn-out debt restructuring process. 

Sri Lankan startups are bucking the trend, and the country should pay heed. Globally, startups fuel economic dynamism, generating value rivalling that of major economies. In 2021, startup funding soared past $600 billion. The Hatch startup community is demonstrating that Sri Lanka has what it takes to become something more.