Startups eye $150m funding
Thai startups are expected to receive US$150-million funding from investors this year due to the growth of entrepreneurial ventures and rising interest from venture capital.
Yet local pioneers say the government needs to speed up on several fronts — matching funding, generating demand for the services offered by startups, and fixing cumbersome regulations.
“A richer variety of local startups and a pretty much established ecosystem are attractive to investors,” Watchara Aimwat, president of the Thailand Tech Startup Association, said at the Startup Thailand Scale Up 2017 forum yesterday.
The ecosystem continues to grow as more established startups begin to scale up in the wake of early funding rounds, he said.
Thailand saw at least US$80 million investment in local tech startups in the first half of 2017 — compared with $86 million for the whole of last year — with online payment platform Omise the biggest winner.
Despite the government providing startups with considerable help, critics say there is still much it can do, such as amending the regulations that allow employees to hold stakes in the company.
Mr Watchara said startups need an automated sandbox (a sandbox is a separate environment used by software engineers to test new code) to test prototype products before they get to end-users.
“Fintech already has a sandbox, and more new sectors are coming round to this idea, such as health tech,” he said.
“We therefore propose the government have an automated system to set the criteria for each sector so startups can simply apply to the sandbox.”
He said the matching fund, a joint-venture comprising the public and private sectors, should focus more on the health, agriculture and travel sectors as these are so important to the country.
“To stimulate demand, the government needs to provide tax incentives for consumers and corporates whose products or services are procured by local startups,” Mr Watchara said.
The electronic verification system dubbed “e-KYC” (Know Your Customers) and electronic signatures are urgently needed as such technology will make it much more convenient for consumers to use fintech services, said Pornthip Kongchun, chief operating officer of fintech startup Jitta.com.
Local startups should think long and hard before jumping into high-growth sectors like fintech or e-commerce because the regulations in these areas are beset with challenges that have yet to be ironed out, while large companies already dominate e-commerce, he said.
“They should not just aim at growing faster, but also find a sustainable business model to earn revenue,” Mr Pornthip added.
According to Jomzup Sittipittaya, co-founder of local startup Exzy Company, government-supported grants are useful but often buried in bureaucracy which means they can take a long time to process.
“The process of approving grants should be accelerated so it only takes one month not, for example, six months, which is too long to expect a startup to wait,” he said.
While Thai businesses can enjoy a 200% corporate tax deduction for expenditures paid out so that authorised third parties can undertake research and development activities, critics say this favours big corporations because most local startups use their own staff for R&D.
Thailand’s startup industry ranks fifth in Southeast Asia but the search is still on for a unicorn, a private company with a valuation of $1 billion or higher, said Pan-arj Chairatana, director of the National Innovation Agency (NIA). He expects this will require at least another three years.
To help startups scale up, the NIA is acting as a bridge for them overseas. It inked a deal with Japan giving them opportunities to meet big corporations there and work together. The memorandum of understanding was signed with the Japan Asean Innovation Support Network — a unit under the Japan External Trade Organization — and the New Energy and Industrial Technology Development Organization, Japan’s largest public management organisation promoting research and development for startups.
The NIA hopes to launch a Japan-Thailand Innovation Fund by early 2018. Government grants for university students who can show proof of ideas are due in three months.