ElevateA monthly newsletter from the Sri Lanka@100 Platform, focused on useful, relevant & topical business information

Issue #1 – February 2021

WWW.SRILANKA100.LK 2

MESSAGE FROM THE EDITORIAL BOARD

A warm welcome to you, our readers. This newsletter is the firstpublication and part of many other offerings we hope to sharewith companies in our network.

The Covid-19 pandemic has created an environment ofuncertainty with many startups, SMEs and businessesstruggling to stay afloat. However, some firms, particularlySMEs have also used new approaches and made adjustmentsto their business model to capitalize on the opportunities thathave emerged in this landscape. In this issue, our lead article“Digital Adoption For Adapting To Crisis Situations”, highlightssome of the innovative ways SMEs are adopting digitalsolutions to expand their businesses. During our conversationswith SMEs, we found significant room for digital adoption andhopefully this piece will give readers some valuable insights onhow to fully embrace technology.

We have also featured highlights from some of our key newsand events. We are excited to announce that we have justonboarded our very first batch of companies to the PortfolioLevel—more details can be found further below.

With applications for the second-round onboarding closing in afew days, we encourage you, if you are the owner or part of abusiness that’s looking for growth and improving youroperational efficiency, to apply yourself or nominate a business.Inclusivity is a key facet of our platform and we are keen towork with companies across the country and businesses thathave women in their leadership or workforce. We look forwardto partnering with you on your company’s growth journey.

Rashmi Peiris ParanavitaneGeneral Manager, SL@100

Thivanka BandaraSenior Consultant, SL@100

Kalim IqbalPartnerships Manager, SL@100

Mathushan MohanamoorthySenior IT Executive, SL@100

WWW.SRILANKA100.LK 3

MESSAGE FROM THE CO-FOUNDERS

Welcome all, to the first Sri Lanka@100 Newsletter. Ourintention is to make this monthly bulletin a pre-eminent sourceof useful, relevant and topical business information, while alsosharing updates on the progress of this fantastic new initiative.

So, what is Sri Lanka@100? While discussing how best wecould impact the Sri Lanka business landscape, we came upwith the idea for a private-sector initiative that would acceleratethe growth of small and medium-sized enterprises across theisland. We specifically identified underserved and under-represented segments across the country—companies withlarge footprint outside the Colombo District, or those headed byfemale entrepreneurs, for example.

Our ultimate goal is to see Sri Lanka become a high-incomecountry by 2048, or within one hundred years of independence.We believe that the way to do that is to unlock the potential ofthese mid-sized companies and SMEs in Sri Lanka—by bringingtogether advisors, investors, trade groups, and businessdevelopment service providers to strengthen the capacity ofthese firms in areas such as marketing, operations, financialmanagement, exports, and access to capital.

Since our launch in September 2020, we have started workingwith some very promising companies, and we are excited tohelp them along their growth journey—details are listed below.We are also currently accepting applications for our secondround and the deadline for that is Friday, the 19th of February.

Several of you run your own businesses, and you will all knowmany up-and-coming mid-market firms that are looking toaccelerate their growth as well. You can go to the SriLanka@100 website to apply or to nominate a company tomake use of the many services that are available through ourplatform.

We must also mention our funding partner, USAID—theirsupport has been invaluable in getting the platform off theground.

Dr. Kumudu GunasekeraCo-founder, SL@100

Managing Director, Stax Inc.

Ruwindhu PeirisCo-founder, SL@100

Managing Director, Stax Inc.

WWW.SRILANKA100.LK 4

A Diamond from the Rough

1. WHY?

Why Does this Platform Exist?

PURPOSE: To make Sri Lanka aHigh-Income Country within 100Years of Independence (2048)—with equitable and inclusive growthenabling all Sri Lankans to realizetheir aspirations.

3. WHAT?

What Exactly Is This Platform?

AN ECOSYSTEM: Where mid-marketfirms can thrive and create value byfocusing on:

1.Building Next-Gen Businesses

2.Operations Optimization

3.Revenue Growth

4.Smart Capital2. HOW?How Will We Get There?

BY: Powering the Growth of Mid-market Firms and Adhering to

the Values of INCLUSIVITY & EXCELLENCE

The Sri Lanka@100 platform was unveiled on 24th September 2020 at ‘The Verandah’, GalleFace Hotel, Colombo District. From left to right: Mission Director, USAID, Mr. Reed J.Aeschliman, SL@100 Chief of Party, Dr. Kumudu Gunasekera, SL@100 Senior AdvisorRuwindhu Peiris, State Minister of Regional Cooperation, Hon. Tharaka Balasuriya, U.S.Ambassador to Sri Lanka, H.E. Alaina B. Teplitz.

SRI LANKA@100—WHY, HOW, WHAT?

SRI LANKA@100 LAUNCH EVENT

WWW.SRILANKA100.LK 5

Businesses across countries and industries were impacted severely by COVID-19, and evenafter a year, with the pandemic still ongoing, the full impact cannot be calculated. However,it has become evident that SMEs are the hardest hit group in the business landscape.Lockdowns and the ensuing decline in demand for products and loss of revenue haveresulted in layoffs and SME closures across the globe and in Sri Lanka.

But history has taught us two things about similar economic shocks:

• Even in severe economic downturns, a small percentage of companies are able to adaptand gain an advantage.

• These crises will create both short-term shifts in demand and also long-term changes inconsumer behavior that can benefit certain companies.

Even during severe recessions, some companies do emerge as winners and thecompetitive landscape of an industry can change with these winners establishingthemselves as new leaders. For instance, during the 2003 SARS outbreak, Alibabaunderstood the need for consumers to shift to online purchases and launched theirconsumer-focused e-commerce platform, becoming one of the largest e-commercebusinesses in the world.

How Companies Emerge from a Recession

9%

74%

17%

Companies that come out strongerCompanies that

don’t survive

Companies that come out weaker

Changes to Competitive Landscape after a Recession

47% of the

companies that went in as leaders came out as laggards

Of the companies that went in as laggards came out as leaders

13%

Source: “Roaring out of Recession” Ranjay Gulati, Nitin Nohria, Franz Wohlgezogen

To emerge from this crisis in a stronger position, companies should reassess growthopportunities—identifying new ways of reaching customers and aligning business modelsto better realize those opportunities.

DIGITAL ADOPTION FOR ADAPTING TO CRISIS SITUATIONS

WWW.SRILANKA100.LK 6

One keyway of managing businesses and ensuring continuity during the pandemic hasbeen the switch to digital mediums. While larger companies are more adept at using digitalmediums, SMEs have often relied on traditional business methods. However, the COVID-19pandemic has become the right moment for SMEs to integrate digital solutions to theirbusinesses.

The most common areas where digital solutions can be used by SMEs to ensure continuityare:

1. Digital marketing

2. Online sales

3. Diversified distribution channels

LKR 475

LKR 950

LKR 1,900

LKR 3,040

LKR 3,040

LKR 5,320

Social Media

Billboards

Radio

Magazine

Newspaper

Broadcast TV

Advertising Cost by Channel(Cost per Thousand Impressions - Global Rates) Each post that is shared can

introduce a business to a newnetwork of individuals andpotential customers.Additionally, social medialmarketing can be cost-effectivecompared to other marketingtactics and providescompanies with the option tostart with a smaller budget andfine tune the marketingstrategy based on results.

The use of digital channels, including social media, is an easy and cost-effective way forSMEs to promote their businesses and products. While digital marketing soundscomplicated, companies can easily set up their own social media presence for marketingactivities. These channels provide businesses the ability to target a wider range ofconsumers than traditional marketing channels and will help develop brand presence.

DIGITAL MARKETING

SMEs who adopt the internet for business activity in India see:W

hic

h r

es

ult

s in

…

Bu

t o

nly

…

51%Higher

Revenue

49%More Profit

7%Broad Customer

Support

27%Of Online SMEs Use E-commerce

Source: Impact of E-commerce on SMEs in India, KPMG.

WWW.SRILANKA100.LK 7

One survey of Sri Lankan Facebook users found that over 79% respondents had beeninfluenced in their buying patterns through Facebook ads and browsing. Given that thereare ~6.4 million users of social media in Sri Lanka (~92% of those are on Facebook), digitalmarketing should fast become a critical component of the marketing strategies of SMEs.

Similarly, SMEs should alsofocus on developing a websiteto establish an online presenceand build credibility as abusiness. The companywebsite becomes the backboneof the digital marketingstrategy as all marketingcontent and advertisementsshould direct potentialcustomers to the websitecarrying a clear idea of whatthe company’s brand is andwhat types of products orservices it offers.

Sri Lanka’s Social Media Marketing Reach, January 2020

5.90 Million

People Reached

990 Thousand

People Reached

6.40 Million

Total Number of Social Media Users

Sri Lankan consumers over the last few years have continued to increase the use of onlinepurchases. However, the adoption of e-commerce increased significantly in Sri Lanka as aresult of the pandemic as consumers were forced to order goods online during thelockdown period. This change in buyer behavior is expected to continue as it providessafety and convenience to consumers—amplifying the need for a digital presence. SMEscan do this either via their own website or by partnering with e-commerce websites.Traditionally SMEs have stayed away from digital payment methods due to lack ofknowledge, equipment, size etc. However, SMEs should now consider adopting digitalpayment methods if they are to take full advantage of shifting to an online sales model.

ONLINE SALES

85% of Sri Lankans who frequently access the internet havepurchased a product or service online.

80% Digital is no longer just for Colombo

of those who frequently use the internet and live outstation have purchased a product or service online.

4 hours+ Digital is no longer just for the youth

daily online time by a large majority of those between the ages of 35 and 44 who frequently use the internet.

1 in 4 Digital is no longer just for spare change

people who shop online at least once a week spend between LKR 5,000 and LKR 10,000 on average.

WWW.SRILANKA100.LK 8

New Digital Channels Used by SMEs Post COVID-19

Marketing

23%

Payment Methods

23%

Sales

24%

Business Administration

16%

Change in Monthly Sales through Digital Channels

33%

26%

41%

Increased

No Change

Decreased

The aim of a digital approach is to ensure that SMEs can compete intensively during thispandemic and build back better for the longer term. Therefore, SMEs should considerdigital as an enabler for business growth and be open to seizing possible newopportunities arising out of this crisis.

By Thivanka Bandara, Manager, Stax Inc.

Thivanka joined Stax in 2013 and currently serves as a Manager at Stax Inc. He leads the overalldelivery function in Colombo and has led multiple projects for Clients spanning a diverse set ofindustries such as logistics, healthcare, manufacturing, hospitality, and consumer goods.

Along with digital marketing and use of online sales, SMEs should also consider how thesewould impact their distribution strategy. Enhancing online presence and broadening thecustomer portfolio will not yield results if the company does not have matching fulfilmentmethods. SMEs can better define their distribution strategy by considering three key areas:

1. How do our potential customers find us and the products and services we offer? Channels used by customers to find you will dictate the channels used for distribution.

2. What is our scale and size—can we handle distribution ourselves? If you don’t have capacity to handle distribution, partnering with other value chain players can become a competitive advantage.

3. What future business goals do we have? Be prepared to take advantage of new channels—these can help to efficiently scale and expand.

DIVERSIFIED DISTRIBUTION CHANNELS

It is encouraging to see how SMEs in Sri Lanka are already adopting digital solutions. Arecent survey by the IFC found that the use of digital channels for sales, marketing, andbusiness administration by SMEs has increased since the onset of COVID-19.

CONCLUSION

WWW.SRILANKA100.LK 9

Sri Lanka@100 recently announced the first group of high-potential companies that wereselected to receive cutting-edge business advisory services that will help accelerate theirgrowth journey. Seven Sri Lankan firms, ranging from a variety of industries and fromacross the country were selected to the top tier of the platform, the ‘Portfolio Level’, fromthirty-seven initial applicants, twenty of whom were shortlisted to pitch to a SelectionCommittee comprising of the Co-founders of the platform and representatives of USAID.

SL@100 will run two selection cycles per year to help small and medium enterprises(SMEs) scale up operations. Co-founder of SL@100 & Stax Managing Director RuwindhuPeiris commented on the impressive pitches these companies made, noting that he is“excited to be partnering with these companies that reflect the soul of Sri Lanka’s ingenuityand the hunger to rise to our full potential.”

The seven companies selected represent a wide range of goods and services fromthroughout Sri Lanka.

SRI LANKA@100 PLATFORM NEWS

FIRST GROUP OF MID-MARKET COMPANIES ONBOARDED TOSRI LANKA@100 PLATFORM

DD Atukorala Group, a nearly 100-year-old business in Kegalle that grew and diversified from a bakery into restaurants and fashion stores.

Industrial Stainless-Steel Fabrications, which supplies sophisticated process machinery to global markets including India, Nigeria, and Turkey.

InsureMe Insurance Brokers, a one-stop destination to purchase any kind of insurance, which was selected for the 2020 Stanford Seed Transformation Program.

Lanka Spice, the manufacturer and retailer of the McCurrie brand of spices and value-added jar products that is currently exported to Australia, Europe, Middle East, and North America.

Randeepa Agrarian, an agricultural equipment provider based in Polonnaruwa, which has been certified as a Great Place to Work.

Saaraketha Holdings, the first ecommerce platform for ‘farm-to-table’ fresh produce delivery in Sri Lanka that now links over 2,500 local farmers to non-conventional markets globally.

UHE Exports, the manufacturer of Halpé Tea packaged in organic teabags from the tea leaf itself, which exports fair-trade tea and herbal products.

WWW.SRILANKA100.LK 10

SL@100 CONDUCTS FIRST WEBINAR ON ‘ENHANCING BUSINESS REACH’

The first webinar under the theme "Enhancing Business Reach -Access to Finance, Markets and Technology" consisting of afireside chat followed by three simultaneous breakout sessions ontopics of vital importance to SMEs was held in February 2021.Across all breakout sessions, the audience was encouraged to askquestions and polls were also conducted to make them moreinteractive. The fireside chat with Dr. Ratna Sahay, theInternational Monetary Fund’s Deputy Director of Monetary andCapital Markets, primarily addressed the topic of digital financialinclusion and the importance of financial inclusion to upliftbusinesses and entrepreneurs.

This session was conducted in English and translated live into Sinhala and Tamil. The‘Access to Finance—Avenues to Raise Capital’ breakout session discussed the importanceof identifying alternative avenues for capital, how to be more effective when approachinginvestors and practical ways to optimize working capital management. Also, in this panel,representatives from USAID's Private Sector Development project (PSD) elaborated onCOVID-specific financing options for SMEs.

In the ‘Access to Markets—Opportunities in Neighboring Markets’ session the paneldiscussed trade trends and opportunities in the South Asian region, with particular focuson successful entry strategies adopted by Sri Lankan firms.

The third breakout session, entitled ‘Access to Technology—Increasing Use of ICT bySMEs’ presented the findings from a recent island-wide survey on ICT usage by SMEs. Thepanelists for the three breakout sessions consisted of representatives from the localcorporate sector, think tanks and international not-for-profit organizations.

The Enhanced Business Reach webinar was conducted in partnership with the CeylonChamber of Commerce and EconomyNext.

SRI LANKA@100 PLATFORM NEWS

Anushka Wijesinha

Economist & International Consultant

Sidath Kalyanaratne

Director, AssetlineCapital

Shamindra Kulamannage

Editor, Echelon

Helani Galpaya

CEO, LIRNEasia

WWW.SRILANKA100.LK 11

Nominate A High Potential Mid-Market Firm

You can also help us to identify and support mid-market firms with high revenue and export growth potential.

Nominating a firm does not mean that it will be automatically considered. Our team will get in touch with the Company, and thereafter, the SL@100 selection process and criteria will be applicable.

Visit www.srilanka100.lk1

2

Apply to Join the Platform

3

APPLY TO JOIN THE PLATFORM TODAY

info@srilanka100.lk

+94 77 163 8128

www.srilanka100.lk