Saturday, December 07, 2019

Startups wait for next move up

Jun 01. 2019
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By Asina Pornwasin
The Nation Weekend 

11,296 Viewed

Almost half the startups in Thailand have not moved beyond seed round funding. The top industries for startups are business and service technology, e-commerce, education technology, travel technology, and health technology. 

Panachit Kittipanya-ngam, president of the Thailand Tech Startup Association, said that more startups turned from B2C to B2B organisations to offer business and service technology services. Those vertical tech startups are growing. especially in the education, travel and health business, Panachit said. 

In 2018, more corporate venture capital (CVC) funds were established, and there were more seed and series A investments – with funding mainly from CVCs. 

One in three startups in Thailand are using deep tech, including artificial intelligence (AI), machine learning, virtual reality (VR), augmented reality (AR), big data, data analysis, biotechnology, and blockchain.

Thai startups have three to four founders on average. The most important factors for the founders are opportunities to commercialise and gain benefit from starting their operations, people's unmet needs or pain point; and the ability to start a business using their own skills and aptitudes. 

Some 82 per cent of founders are males, and their average age upon starting the business is 33. Most of them come from study fields such as business management, engineering and natural science.

The main talent shortages are among technology experts, especially developers, programmers, data scientists, researchers and marketers. 

Around half of startups use the government's support programmes. The top five are startup voucher, innovation coupon and NIV Venture, TED fund, Depa Digital Startup Fund, and 5-year Startup Income Tax Exemption.

Over half of them participate in acceleration programmes hosted by the private and government sectors. They gain networks, mentoring and branding benefits. 

Around 80 per cent of startups start with less than Bt5 million. The main current source of funding is personal savings as well as funds from family friends and acquaintances. The top three most-needed financial instruments are prefer-share, crowdfunding, and vesting. 

Around 31 per cent of startups earn intentional income. The share of international income is approximately 28 per cent of the total income. Around 19 per cent of startups have overseas operations, 

while 91 per cent plan to expand operations abroad. 

On average, 64 per cent of startups earn income after six months of operation, while 30 per cent have been making operating profits after one to three years of operations.

Most startups need support in areas of networking, technology knowledge, business training, grants and funding, ease of doing business, and tax reductions and exemptions. 

Over half of startups have a long-term goal to sell and cash out of their enterprise, mostly via an IPO. Around 37 per cent aim to expand their enterprise as a long-term business. 

These preferences are similar to startups in Singapore. Around 40 per cent of them want to sell and cash out, especially via mergers and acquisitions, while 30 per cent want to expand, and a further 30 per cent do not have a planned exit. 

Most startups require one-stop service, investment law and financial instruments, competitive tax incentives and a central knowledge centre. They also need support talent and workforce development especially in creating quality developers and programmers with experience.

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