Sri Lanka Is Building Status, Not Startups

Here’s the uncomfortable truth: In Sri Lanka, labour is cheaper than software. And bragging about the number of employees you have is a better cocktail discussion than the latest SaaS tool you implemented.

The key takeaway? We're not optimised for productivity or scale. Instead, we’ve built a system around comfort, complacency, and status.

Take this simple example: While banks in the developed world go fully digital and branchless, we’re still proudly opening new branches. One could easily build a more seamless app for the money spent on opening and running a new 'premier' branch in the heart of Colombo.

We don’t solve problems with systems or tools. We solve them by outsourcing them to people.

Capital doesn’t create traction; traction creates capital

The second issue is that there isn’t enough commerce. Top startup cities around the world have large domestic markets that celebrate entrepreneurship and startups by buying their products and services, not giving them awards. Something local startups struggle even with countless awards and accolades to their name.

The era of building a startup using capital ended in 2020. Today, investors seek both traction and momentum. Even if you have the former, the latter is rarely seen. Why is momentum important? Because in this AI-driven world, your window of opportunity is small.

Investors claim there isn't quality deal flow. Yet, you can't fix deal flow by throwing more money at it. That only inflates startup valuations without matching revenue, which hurts the ecosystem in the long run.

Skate to where the puck is going, not where it has been

From 2010 to 2020, most founders focused on solving problems related to the island. Since the pandemic and the financial crisis, more and more are looking at building regional and global startups. Talent has always been universal. Opportunity wasn’t. But now, the world is more connected than ever. And for the first time, opportunities are universal for the audacious.

When Kaiju Labs was acquired by KAST, they were doing around US$20,000 in ARR. KAST raised US$10 million in a seed funding round led by HongShan Capital Group and Peak XV Partners, which allowed them to acquire Kaiju for US$2,000,000 (a revenue multiple of 100X). Today, their entire development is out of Sri Lanka, and the team has grown from four to forty in less than 12 months.

Until recently, most Indian startups set up abroad: Delaware, Singapore, even the Caymans, to make it easier to raise funding from global investors. Moving back isn’t easy. It means legal headaches, tax hits, and regulatory hurdles. But many are doing it anyway. Why? India’s booming economy, cleaner IPO paths, and fewer compliance nightmares are pulling them home.

We cannot replicate what other countries did 10-15 years ago and expect the same outcome. The world has evolved, and the playbook has changed. More importantly, founders mature faster than ecosystems. The best founders have started solving global or regional problems. As a result, they will attract international investors. So, why raise rupees when you're earning in dollars?

We’re not building startups; we’re building an empty stage.

I feature early-stage tech startups founded by Sri Lankans from around the world. I hope this will create awareness, bring people together and inspire the younger generation.