Tipping point year forecast for startup ecosystem


Emerging technology ventures are tipped to build on the solid performance seen in 2018, with a busy schedule of fundraising deals ahead to spur growth

The startup ecosystem in Thailand in 2018 turned in a good performance, growing at least 30 to 40 per cent from the previous year, and is expected to power through above 50 per cent growth in 2019 in terms of the total investment injected into startups.
Next year is expected to see several large series C fundraising deals among Thai startups that have already secured series B. Some have achieved “centaur” status, with valuations of at least US$100 million (Bt3.26 billion). 
Ookbee, for example, will raise series C funding between the second and third quarters of 2019, while aCommerce, Pomelo and Omise are also on track to raise series C. Moreover, many small and medium-sized startups will exit to a higher level in 2019, giving potential for the year to be the tipping point for Thailand’s startup ecosystem. 
Series A fund reassignment occurred in 2018, most notably the deal of Fastwork and Tourkrub.
The past year saw no exciting big series B deals, as the previous year saw a proliferation of startups reaching that level of investments. Eko, however, raised $20 million series B led by SMDV.
Eko’s platform, which is now used by hundreds of companies including leading groups such as Thanachart Bank and True Corporation, was built to solve a growing problem for businesses that rely on mobile-first, distributed non-desk based workforces.
Fastwork secured series A of $4.8 million from investors including China’s Gobi, Japan’s Line Corp, Partech Partners and Vickers Venture Partner.
Tourkrub also secured series A from Kingpower Click, Government Saving Bank’s SME Equity Trust #3, 500 TukTuks and the Thai entrepreneur owner of Tao Kae Noi, Itthipat Peeradechapan.
Krating Poonpol, a founder of the Disrupt Technology Venture top startup education and pre-accelerator programme in Southeast Asia, said that in 2019 there will be more small and medium-sized exits of startups that are mostly in series A. Next year, will see a lot more fundraising beyond series A, which is series B and series C. 
“Investment in startups in Thailand this year continued to increase from 2017, but almost of them stayed at series A, so next year we will see a lot more beyond series A raising,” said Krating, who is also the managing partner of 500 TukTuks, a micro VC fund focused on Thailand and Southeast Asia.
However, he warned that talent and regulation are the two large factors potentially affecting the growth of the Thai startup ecosystem. In the current situation, he said, finding the talent needed by startups is harder than finding the venture capital. 
Based on his experience of being involved in startup applications through 500 TukTuks and Disrupt Technology Venture, Krating ventures that the nation now has around 500 to 600 startups. Of particular note is that a lot of the interesting startup projects among small and medium-sized enterprises (SME) are working on deep technologies and innovation. The challenge is how to help them grow to full-fledged startups.
Vertical startups are potentially experiencing a boom, especially those involving financial technology, property technology, food technology and education technology. The growth momentum will continue at a good pace in 2019, he said.
Under the 500 TukTuks portfolio, around 10 of its 57 companies are in series A, while the remainder are in the bridge round between series A and series B. Of the 57 companies, around a half will continue and have follow-on funding, he expects. 
Thanawat Malabuppha, president of Thailand e-Commerce Association and founder of Priceza, predicts that 2019 will see startups getting backup from investors and corporates with series A and series B raising. The growth areas are in commerce and finance sectors. 
Natavudh Pungcharoenpong, co-founder and chief executive officer of Ookbee and managing partner of 500 TukTuks, says local corporate venture capitals in Thailand were very actively investing in startups over the past year. 
There were also several large deals between super-startups and large corporate such as Kasikorn Line Company, the joint venture company’s connection of Line and Kasikornbank (KBank). 
In another example, Grab and KBank partnered to launch GrabPay by KBank, a co-branded mobile payment application and financial solution. 
The partnership comes with a $50 million strategic investment from KBank in Grab, and is part of Grab’s ongoing fundraising round.
Sompoat Chansomboon, managing director of dtac Accelerate, said that the total investment in startups in Thailand for 2018 increased between 30 and 40 per cent from 2017. There were also many real use case executions of blockchain and artificial intelligence (AI). For example, Thai startup Bitkub Capital Group Holding, aims to be the next digital disrupter in the area of financial services, driven by blockchain technology and with the goal of being the leader in the blockchain ecosystem for Southeast Asia.
 Technology will not only disrupt the banking industry, but go on to disrupt the stock exchange as a whole, predicts Sompoat, and blockchain will be the key disruptive technology.
The coming year will be distinguished by the acquisitions and partnerships between startups and large corporates, with the investment in startups in Thailand next year expected to grow above 50 per cent. 
For its part, dtac Accelerate, will focus on helping series A startup to move to secure series B fundraising, he said.
“Around 10 to 20 per cent of our 46 teams have already secured series A, so we will help them to move to secure series B. Some 72 per cent of the startups from dtac Accelerate have secured vital follow-on funding. Elsewhere in Asian, the proportion is around 20 to 25 per cent,” said Sompoat.
The next trend is to see a lot more startup founders from SME, domain experts and women in the next year. 
Oranuch Lerdsuwankij, founder of Techsauce, said moving Thai startups from series A to series B presents a big challenge due to the need to expand regionally. More will succeed next year, Oranuch predicts.
This year, a lot of B2C startups transformed to B2B startups. And the year saw strong growth in startups that provide solutions/ platforms/ services for businesses or corporates. 
“Startups that have proprietary technology or exclusive data will have a competitive advantage over the others. There is room for startup founders who have ever worked for, or have connection with, the corporates. The room for, the room in the marketplace, is in corporate users and not in mass users,” said Oranuch.