Sri Lanka

MEMBERS:
Information and Communication Technology Agency of Sri Lanka

Sri Lanka’s Startup Development Strategy boasts of state-of-the-art technology parks, startup- friendly policies, a venture fund, and an entrepreneur visa, to name a few initiatives in our holistic approach to develop our startup ecosystem.

Jayantha De Silva
Secretary, Ministry of Technology
Top 10 Global Ecosystem: Affordable Talent
#3 Asian Ecosystem: Affordable Talent
Top 30 Asian Ecosystem: Bang for Buck

Highlights

Sri Lanka’s innovation ecosystem is evolving rapidly as the government and other players look to nurture local talent, improve the business climate, and foster international connections. These efforts began to bear fruit when Sri Lanka was ranked in the top 20 Asian Economies on the Global Innovation Index in 2020.  Sri Lanka ranks second in the region for ease of starting a business. A tropical paradise, the country also offers entrepreneurs a home base with a high quality of life that serves as a convenient entry point to massive neighboring economies. New laws recently designated Colombo Port City as a Special Economic Zone, making it an internationally focused business hub that offers incentives for companies to do business in Sri Lanka. The Ministry of Technology has commissioned five new technology parks in the country which will include incubator facilities for the establishment of startups and for creating high-income-generating jobs for youth by supporting technology-focused businesses. The identified cities include Galle, Kandy, Nuwara Eliya, and Kurunegala. An initiative to bolster ties between Sri Lanka and the EU got underway in 2020 with a series of meetings between European experts on innovation networks, incubation and acceleration, and startup funding and Sri Lankan stakeholders to identify collaboration opportunities between European and Sri Lankan startups. Notable companies emerging from the ecosystem include blockchain-as-a-service company NIFTRON, which recently raised over $100,000 in angel funding in April 2021 and nCinga, an enterprise solutions software company, had an exit of $15.5 million in 2019.

Ecosystem by the numbers

TOTAL EARLY STAGE FUNDING
<$50 m
GLOBAL AVG.
$548 m
ECOSYSTEM VALUE
$132 m
GLOBAL AVG.
$13.68 bn
MEDIAN SEED ROUND
$50 k
GLOBAL AVG.
$480 k
MEDIAN SERIES A ROUND
$1.06 m
GLOBAL AVG.
$3 m
SOFT. ENGINEER SALARY
$6 k
GLOBAL AVG.
$44 k

Sub-sector Strengths

Cleantech

Sri Lanka is aiming to become an energy self-sufficient nation by 2030 by increasing the country’s power generation capacity from 4,043 MW to 6,900 MW by 2025 with a focus on renewable energy. Proposed incentives for offshore wind and solar power plants, a 7-year tax holiday on renewable energy projects, and investment in sustainable energy projects are poised to further boost the sub-sector. Sri Lanka’s current grid connectivity of 98% is high by regional standards. The Green Energy Champion is an advanced accelerator program for sustainable businesses.

Agtech & New Food

In 2021, ICTA Sri Lanka and enpact e.V, Germany signed an MoU for knowledge-sharing activities and encouraging technology-focused investments and related services in Agtech and Watertech. Entrepreneurship support in this sub-sector include the Good Life Accelerator, and the ecosystem has seen recent successes in companies building cutting-edge technology in Agtech. Sensz Agro, a leading AgriTech startup, raised $50K in a seed round in Jan 2020. The startup was named a Top 5 Irrigation Solution impacting the Agricultural Sector by StartUs Insights.

Reasons to move your startup to Sri Lanka

Tax Incentives

Sri Lanka offers a 5 to 10-year tax holiday to private companies in certain sectors, and maintains a 0% corporate tax rate for the tech sector. There is zero capital gains and zero dividend withholding tax for foreigners. ICTA and PwC Sri Lanka, partnered recently to introduce an alternate Credit Evaluation Framework specifically for tech companies to expand their financing opportunities through local financial institutions.

Startup Friendly Government

In October 2020, the Ministry of Finance introduced a procurement policy that requires any application software bids for the government under a value of LKR 2 million to exclusively go to tech startups. In 2021 the Digital Nomad visa program was introduced, enabling foreign individuals to work remotely from Sri Lanka for 1 year.

Get connected

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