ILLUSTRATION: SHUTTERSTOCK
SOMEONE WILL describe the ecosystem’s progress — the $1 billion in IT exports, the Lamina Labs Y Combinator story, the Fusemachines NASDAQ listing — and then the room will pause. Someone else will say: “But when are we going to have a unicorn?” The unicorn, a startup valued at $1 billion or more, has become the KPI against which Nepal’s tech ambition is measured. It is the wrong KPI. The fact that it has achieved such central status in the conversation is itself a symptom of what is missing from it.
The math problem comes first. A startup valued at $1 billion is typically expected, by the investors paying that price, to be generating $100 to $200 million in annual recurring revenue, on a five to ten times multiple, or to have a credible path to revenues at that scale within three to five years. Nepal’s GDP is some $43 billion. Its entire IT services sector generates an estimated $1 billion in annual exports across 100,000 workers and 3,960 registered startups.
For a single Nepali company to generate $100 to $200 million in annual revenue from a primarily domestic market, it would need to capture somewhere between a quarter and half of the entire formal IT economy in Nepal. That is, rather than an investment thesis, is a monopoly fantasy.
The companies that could realistically reach unicorn valuations from Nepal are therefore not primarily Nepali in any commercially meaningful sense. Fusemachines is incorporated in the United States, employs its senior technical staff in New York and Kathmandu, and listed on NASDAQ. Its Nepali identity is real: founder Sameer Maskey is Nepali, the company employs hundreds of Nepalis, and the Kathmandu office is substantive. Yet the company that will eventually be worth a billion dollars is a Delaware C-corporation serving American and European enterprise clients.
Lamina Labs, which got into Y Combinator and raised $3 million in San Francisco, operates from California. The startups with the most plausible unicorn trajectories are the ones that have already partially left. That is worth noting before Nepal’s government builds a Sovereign AI Computing Centre in Kathmandu specifically to attract the next Lamina Labs back.
This is not to say unicorns are bad. The policy energy devoted to creating conditions for a hypothetical billion-dollar company is policy energy not being devoted to the real constraint on Nepal’s actual 100,000 IT workers. Those workers, mostly employed by IT services firms doing outsourced data work, cloud development and healthcare analytics for Australian and American clients, are currently penalised by the absence of double taxation avoidance agreements with their three largest markets: the United States, the United Kingdom and Australia.
A Nepali IT company working for an American client pays tax in the US on the services rendered there and then potentially faces Nepali tax on the same income when repatriated. A DTA, which would eliminate this double taxation, would immediately improve the profitability of every firm in the sector. It is a three-year diplomatic negotiation. It generates no press releases during that negotiation. It will never be a headline. It would do more for Nepal’s 100,000 IT workers than any unicorn could.
The Rs 400 million in VAT refunds sitting unclaimed in the government’s pipeline, confirmed by NAS-IT’s own lobbying materials, represents a working capital problem for the firms that are supposed to be growing. A company owed Rs 400 million by the government and simultaneously borrowing at nine to twelve per cent to cover operating costs is not a company thinking about its Series B. It is a company managing a government-created liquidity trap. Fixing the VAT refund pipeline would free more productive capital in the IT sector this fiscal year than any startup fund the budget could allocate.
Pathao offers a useful measure. The ride-hailing company has a valuation of some $200 million — five times what most Nepali startups will ever see and one-fifth of unicorn territory. It employs real people, moves real goods, processes real payments and operates across Nepal and Bangladesh with genuine market depth. Building five Pathaos is a more achievable and economically more impactful ambition than building one unicorn. “Building five Pathaos” does not produce the same conference keynote energy as “Nepal’s first unicorn.”
India’s hundred-plus unicorns took thirty years of ecosystem building. The Infosys generation trained the engineers who built the Flipkart generation, who trained the founders of Meesho and Razorpay. Each generation funded and mentored the next. The exits created angel investors who recirculated capital and experience. Nepal is at the beginning of that process. Dolma’s partial CloudFactory exit in 2019 was the first big private equity exit in the country’s history. The correct response to being at the beginning is to build the boring infrastructure of the middle: DTA treaties, VAT refunds, seed funds, talent retention. It is not to fixate on the glamorous end state.
Nepal will have a unicorn eventually. Probably one incorporated in Singapore or Delaware. Probably founded by someone who went through MIT or Stanford. Probably serving markets primarily outside Nepal. That company will be good for Nepal’s reputation. It will not have been built by a government AI computing centre. It will have been built by a person who, at a critical moment, had access to the right capital at the right stage. The most likely source of that capital is still not in Kathmandu. ■
