The first part of the study provides contextual background to the financing gaps and associated barriers, which restrict access to finance for HI start-ups. These barriers are driven by both supply and demand sides of the financing equation. Supply side barriers include: high transaction costs associated with financing
high levels of credit risk associated with HI start-ups
high collateral required by financial institutions
non-conducive legal and regulatory environments for investment in HI start-ups
lack of start-up expertise and dedicated resources by financiers
and finance products that are not tailored to HI start-ups needs and circumstances. Demand side barriers include: reliance by HI start-ups on informal financing sources
lack of awareness on the process to apply for funding from formal financing sources
low levels of financial literacy by HI start-ups
and the fear of losing control by involving external investors. This section also contains a broad overview of the country frameworks governing the start-up sector, together with some of the initiatives relating to access to finance. The second part of the study covers the fieldwork undertaken in Vietnam, Cambodia, and Nepal. The fieldwork gathered views from investee firms (irrespective of whether they were successful in raising finance or not), investors, and other stakeholders. The fieldwork was aimed at understanding the severity of the financing gap for HI start-ups, the stage(s) of financing impacted by lack of access to finance, and the sources of financing for HI start-ups. Lastly, financing catalyst recommendations address non-financing impediments, which if overcome will have a positive impact on access to finance.