Thailand’s startup ecosystem has a Seattle Problem. And that’s not such a bad thing

Thailand startup ecosystem

A few weeks ago, one of the largest banks in Thailand made an announcement that marked a seismic shift in the Southeast Asian banking landscape and the Thailand tech and startup ecosystem.

Siam Commercial Bank (SCB), a Thai full-service financial institution and growing corporate fintech powerhouse, announced a massive restructuring on the magnitude of Google & Alphabet.

The publicly-listed bank would be taken private in a share-swap arrangement that would see SCBx, a non-bank holding company, take its place on the Stock Exchange of Thailand, becoming the umbrella organisation for both the original bank entity and SCB’s growing tech portfolio, which has come to include one of the world’s largest bank corporate VC funds and a number of corporate venture-built fintech.

SCB essentially signalled that it would no longer be a technologically savvy bank, but rather that it would become a tech company that just happens to have strength in financial services.

Additionally, with the non-bank SCBx sitting atop the structure as the publicly-listed entity and the unlisted bank SCB as the subsidiary, the group retains access to capital markets while freeing up much of the group’s tech-oriented, non-bank subsidiaries from the scrutiny of financial regulators.

While a long, challenging road of execution lies ahead for the folks at SCB and SCBx, it definitely marks the boldest move yet from what techies traditionally view as a stodgy, bureaucratic, corporatised banking industry.

Also Read: Ascend Money becomes Thailand’s first fintech unicorn following US$150M funding

Succeed or fail, SCB has certainly signalled that it is prepared to take daring yet calculated risks normally reserved for tech companies.

In the hours and days that followed the announcement, a shell-shocked Thai business community and startup ecosystem (and I heard on good authority that even a major Southeast Asian bank had a bit of a freak-out/wake-up moment) asked themselves: “What are the implications?”

Amid the glitzy announcements, complex financial and organisational engineering, and SCB’s adrenaline-fueled stock price jump, what is the essence of SCB/SCBx’s strategy, and what does this ultimately mean for the Thai tech ecosystem and its participants?

In an attempt to unpack the complexity of SCB’s plan and divine any insights/implications/ predictions/fallout from their reorganisation, I connect the SCBx announcement with an opinion/ hypothesis I’ve been contemplating for the past few years, namely that Thailand’s startup ecosystem has a Seattle Problem.

An overarching issue that Thailand’s entrepreneurs, venture capitalists, government officials, academics and other stakeholders have struggled with over much of the past decade is how to boost Thailand startup formation, activity, growth, and exit.

How do we meet the aspiration of making Thailand a startup hub of Southeast Asia? How do we attract and build a community of global entrepreneurs and tech talent, and how do we attract an outpouring of venture capital to fund them?

While the Thai startup ecosystem has seen steady progression over the years, our growth relative to our emerging ecosystem peers has been adequate at best, and middling and lacklustre at worst. As a venture capitalist and as an advisor to various corporates, government agencies, and educational institutions, I always get asked these questions, and whether there is some magic bullet that will help the Thai ecosystem hit an inflection point that will send it on a rocket ship trajectory.

Also Read: Startup x Innovation Thailand Expo 2021: A virtual world of innovation

In my years as a VC, I have had the opportunity to get an up-close look at nearly three dozen developed and emerging startup ecosystems across six of the world’s seven continents and looking at the Thailand ecosystem has helped me to frame the issue in terms of a simple binary model: Silicon Valley vs. Seattle.

Silicon Valley vs. Seattle

Silicon Valley represents what I see as a relatively balanced startup ecosystem, where tech giants and fast-growing startups manage to compete yet co-exist in a delicate balance. While the balance of power lies with companies such as Apple, Google, Facebook, and numerous others, small and fast-growing startups sprout up constantly, and many have more than a fighting chance to reach scale and even compete head-to-head against the giants, sometimes even becoming a tech giant themselves.

This established and proven path of growth, profitability, and often exit has attracted and created a rich community of serial entrepreneurs continuously launching startups, and venture capitalists who will fund them, knowing that there are ample opportunities to make attractive returns on investment.

Silicon Valley inhabitants include a healthy mix of those who enjoy working for large, prestigious tech giants, and those who want to launch or work for dangerously risky and sexy, hair-on-fire startups, as well as a demographic of talent who have done both.

It is this fighting chance to compete and succeed against tech giants (and individual predisposition towards risk and “flying without a net”) that spurs a constant infusion of new entrepreneurial talent and ventures.

Cities like London, Tel Aviv, and Singapore have similarly balanced ecosystems, with startups able to nimbly navigate amongst large international tech companies, as well as large-cap corporations with massive capital budgets to direct towards their own innovation initiatives.

On the other side of the binary are cities such as Seattle, which at first glance deeply resembles Silicon Valley and the Bay Area: tech giants in the form of Microsoft and Amazon; strong local universities generating pools of tech talent; and beautiful cities offering attractive lifestyles, modern infrastructure, entertainment options, dining scenes, and outdoor diversions.

Also Read: How Thailand’s Ricult uses deep tech to improve the lives of smallholder farmers

But a closer look at Seattle’s tech scene reveals a surprising dearth of startups and venture capital firms. This isn’t to say that there isn’t a startup and VC scene in Seattle, or that startups and VCs there don’t scale or make money.

But relative to the explosion of activity in Silicon Valley, the level of new venture activity in Seattle is quite muted. Why is this?

I speculate that it is a combination of

  • Seattle’s homegrown tech behemoths Amazon and Microsoft (as well as other large tech companies with offices in the city) possessing such an overwhelming and lopsided balance of power relative to smaller tech ventures, which can stifle and smother startups before they can achieve sufficient scale to hold their own against the giants
  • a disproportionately large pool of tech talent that actually prefers the comforts, stability, generous compensation, and perks of working for a tech giant. This creates a tech ecosystem where tech activity is overwhelmingly centred around large tech companies, compared to a more balanced split between the tech giants and tech startups.
  • Additionally, amongst Seattle’s comparatively smaller startup ecosystem, activity is somewhat more tilted towards business-to-business (B2B) startups, much catering to Seattle’s numerous corporations and even the tech giants themselves, compared to the Bay Area, which harbours a more balanced split between B2B and B2C (business-to-consumer) startups. Seattle’s comparatively stronger focus on B2B startups means that entrepreneurial enterprises may involve longer sales and more measured growth cycles, and less the hyper-kinetic growth of their B2C cousins.

This brings us back to Thailand, and specifically Bangkok. For much of the past decade, Bangkok has seen a steady and gradual build-up of grassroots entrepreneurial activity and venture capital investment, but such growth has been more linear (measured in percentages) rather than the explosive, exponential growth (measured in multiples) that world is characteristic of an ecosystem on a rocket ship trajectory.

A look at Thailand’s startup ecosystem

New venture creation is still largely at the hands of first-time entrepreneurs instead of seasoned serial/repeat entrepreneurs, with some seed funding provided by a very small but growing community of angel investors, and the bulk of institutional seed capital coming from 500 TukTuks, the Thai arm of 500 Global (previously 500 Startups).

Also Read: Angel Investors: leading the charge for startup growth in Thailand

While the most prolific seed-stage investor at over 70 investments across two funds, TukTuks is only one firm that can only cover so much ground, and its aggressive investment strategy can only fund a fraction of startups that have been created in Thailand.

While several regional VC firms have invested in Thai startups, most of them have been at Series A rounds, after startups have validated their products and services and have created a workable monetisation model. At the idea or pre-revenue stage, seed capital remains in desperately short supply.

2016 was a bit of a watershed moment in Thailand’s technology and innovation lifecycle. That was the year where the concept of corporate venture capital caught fire and a plethora of corporate funds was formed.

Thailand’s telecom operators had been operating CVCs and accelerators for years, but with Thailand’s largest banks, industrial conglomerates, property developers, and Agri/food companies all piling into technology and forming innovation and venturing units, Thailand transformed into the one economy in the region where the bulk of the country’s innovation activity and capital was almost exclusively focused on corporate innovation.

This was incrementally beneficial to local startups, as some of these large CVC funds invested in a handful of local Series A and B rounds, but still very little support has flowed to the idea and seed-stage ventures. Corporate innovation activity was directed largely towards in-house transformation and overseas startup investment.

Where this corporate activity did have a tangible impact on the local startup scene was to vacuum up tech talent that was already in short supply. Every tech ecosystem in Southeast Asia screams for evermore tech talent, from developers to salespeople, desperately raising funding rounds so they can outbid and outcompete for talent.

But when corporates form innovation and venture building units, they exacerbate these talent shortages. Cash-poor, ramen-eating entrepreneurs now need to contend with deep-pocketed corporates who hire by the dozens, in effect sucking out the oxygen from startup growth aspirations.

Large, sexy tech operations like Kbank’s Kasikorn Business-Technology Group (KBTG) or SCB’s Digital Ventures are very attractive career options for young, Thai, risk-averse tech workers who want to work on cutting edge technology projects but with the security that a large-cap, the blue-chip corporate can provide, in much the same way that Amazon and Microsoft are sexy-but-safe options for their Seattle counterparts.

Also Read: Flash Express adds US$150M more to its kitty, becomes Thailand’s first unicorn

SCB’s mega-reorganization represents another watershed moment, not just as a signal for how technologically savvy, aggressive, and woke a Thai corporate can become, but also for the tidal wave of forces it potentially unleashes.

As mentioned, banks and corporates across the Thai landscape had their “Oh, crap!” moments in the days that followed the SCBx bombshell, re-examining their own innovation and transformation strategies (and undoubtedly realising that much of it is more hype than real disruption, more sizzle than steak), and trying to figure out how to compete in the tech/innovation/disruption arms race that SCBx has touched off.

Competition for local limited partner capital will heat up tremendously; expect that Krungsri Finovate’s recently-announced startup private equity trust fund and the soon-to-be-formed US$600-800 million CP Group/SCBx venture fund will compete aggressively for corporate investment funds, family office money, and retail investor savings that might otherwise have gone to equity crowdfunding platforms or institutional seed funds like a 3rd 500 TukTuks fund or emerging angel syndicates.

Expect other Thai corporates to announce reactive and copycat innovation and transformation strategies in the coming months, giving birth to the next wave of both corporate venture capital and corporate venture building units.

Thailand has the potential to become a regional tech hub, but one dominated by large tech-oriented corporates rather than a community of startups. Hence, Thailand has a Seattle Problem.

Now, when I use the word “problem”, this is a bit of hyperbole. Seattle isn’t a “problem” in the negative sense, but rather in an unexpected, unintended, or divergent outcome sense. Seattle is a fabulous city (after a recent visit there a few weeks ago, I dare to say it might even be my favourite in North America), and its thriving tech scene, dominated by giants as it is, has led to the robust economic growth and development that has made it one of America’s great cities.

Also Read: How Thai food supply chain startup Freshket weathered through the pandemic

Bangkok is similarly becoming a vibrant, cutting edge tech ecosystem overwhelmingly dominated by large players, but from the standpoint of new venture creation, entrepreneurs looking to launch startups in Thailand could find the local ecosystem a desolate desert dried up of resources, with capital and talent flowing into those large corporates without any trickle-down to smaller, entrepreneurial enterprises.

Not necessarily a bad outcome if we want to emulate Seattle, but not so great if we want to follow Silicon Valley’s path.

This is not to say that it is all doom and gloom if we want to create a vibrant community of startups to balance our growing community of corporates-turned-tech-giants.

I have a few ideas on how our ecosystem might tilt the balance a bit more towards grassroots entrepreneurship, boost new venture creation, and give Thailand’s most embryonic startup Davids a fighting chance against its corporate Goliaths:

  • The Thai government needs to wake up and realise that nationalism and patriotism is a detriment to our Thailand 4.0 aspirations. Erecting barriers to foreign entrepreneurs and talent to come into this country doesn’t protect Thai startups, but rather hobbles them. We can either create a hyper-competitive yet vibrant ecosystem of both local- and foreign-founder startups, or a small, static, protected tribe of local startups that make little to no headway against Thailand’s emerging corporate/tech behemoths. I say open the floodgates and welcome all-comers who want to call the Thai startup ecosystem home. This means wholesale immigration reform, including a redesign of current smart visa initiatives, which are great in concept, but whose execution leaves much to be desired.
  • Also, the Thai government needs to create attractive and feasible incentives that would spur regional VCs and Thai corporates to invest in the high-risk idea and seed-stage ventures, which could come in the form of co-investment, profit sharing, first loss capital, and tax exemptions, among others. Resources should also be directed towards building, training, and incentivizing a community of angel investors to provide seed capital.
  • Government agencies and universities also need to find creative means of providing grant capital and non-monetary services that could substitute for equity seed funding to get new ventures from zero to one and survive and scale just long enough to reach the early-stage Series A investment window that will draw in traditional VC funds. In fact, displacing seed and angel funds with grant and non-monetary resources could create investible startups without the baggage of messy cap tables that so often ward off regional VC from the Thai early-stage investment scene.
  • Alternatively, Thailand’s universities could consider establishing university venture capital funds, or UVCs, similar to those that have been set up by universities in the UK or the US. If integrated with university startup accelerators and technology transfer offices, along with the government and universities modernizing intellectual property rules and regulations that would share the spoils of innovative research with contributing faculty and students, we might see a proliferation of entrepreneurial activity coming out at the university (or even high school!) level, baking in entrepreneurial expertise, aptitude, and appetite earlier on in Thai people’s career development, steering them towards more daring career paths instead of just safe, conservative, conventional routes.

Also Read: Conicle bags US$3M Series A to grow its ‘cloud university’ in Thailand

There is an old Chinese curse that is often confused for a blessing: May you live in interesting times. Looking at the trajectory of the Thai tech and startup ecosystem, it is hard to deny that we are living in interesting if not exciting times, but rather than looking at that as either a blessing or curse, we might view that as a challenge or call to action.

Likewise, Thailand having a Seattle “problem” can be either a good thing or a bad thing, but it is best that we look at it as a challenge or divergent outcome if we are looking to grow our ecosystem and calibrate it for new venture creation.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: anekoho

The post Thailand’s startup ecosystem has a Seattle Problem. And that’s not such a bad thing appeared first on e27.

,

Thailand startup ecosystem

A few weeks ago, one of the largest banks in Thailand made an announcement that marked a seismic shift in the Southeast Asian banking landscape and the Thailand tech and startup ecosystem.

Siam Commercial Bank (SCB), a Thai full-service financial institution and growing corporate fintech powerhouse, announced a massive restructuring on the magnitude of Google & Alphabet.

The publicly-listed bank would be taken private in a share-swap arrangement that would see SCBx, a non-bank holding company, take its place on the Stock Exchange of Thailand, becoming the umbrella organisation for both the original bank entity and SCB’s growing tech portfolio, which has come to include one of the world’s largest bank corporate VC funds and a number of corporate venture-built fintech.

SCB essentially signalled that it would no longer be a technologically savvy bank, but rather that it would become a tech company that just happens to have strength in financial services.

Additionally, with the non-bank SCBx sitting atop the structure as the publicly-listed entity and the unlisted bank SCB as the subsidiary, the group retains access to capital markets while freeing up much of the group’s tech-oriented, non-bank subsidiaries from the scrutiny of financial regulators.

While a long, challenging road of execution lies ahead for the folks at SCB and SCBx, it definitely marks the boldest move yet from what techies traditionally view as a stodgy, bureaucratic, corporatised banking industry.

Also Read: Ascend Money becomes Thailand’s first fintech unicorn following US$150M funding

Succeed or fail, SCB has certainly signalled that it is prepared to take daring yet calculated risks normally reserved for tech companies.

In the hours and days that followed the announcement, a shell-shocked Thai business community and startup ecosystem (and I heard on good authority that even a major Southeast Asian bank had a bit of a freak-out/wake-up moment) asked themselves: “What are the implications?”

Amid the glitzy announcements, complex financial and organisational engineering, and SCB’s adrenaline-fueled stock price jump, what is the essence of SCB/SCBx’s strategy, and what does this ultimately mean for the Thai tech ecosystem and its participants?

In an attempt to unpack the complexity of SCB’s plan and divine any insights/implications/ predictions/fallout from their reorganisation, I connect the SCBx announcement with an opinion/ hypothesis I’ve been contemplating for the past few years, namely that Thailand’s startup ecosystem has a Seattle Problem.

An overarching issue that Thailand’s entrepreneurs, venture capitalists, government officials, academics and other stakeholders have struggled with over much of the past decade is how to boost Thailand startup formation, activity, growth, and exit.

How do we meet the aspiration of making Thailand a startup hub of Southeast Asia? How do we attract and build a community of global entrepreneurs and tech talent, and how do we attract an outpouring of venture capital to fund them?

While the Thai startup ecosystem has seen steady progression over the years, our growth relative to our emerging ecosystem peers has been adequate at best, and middling and lacklustre at worst. As a venture capitalist and as an advisor to various corporates, government agencies, and educational institutions, I always get asked these questions, and whether there is some magic bullet that will help the Thai ecosystem hit an inflection point that will send it on a rocket ship trajectory.

Also Read: Startup x Innovation Thailand Expo 2021: A virtual world of innovation

In my years as a VC, I have had the opportunity to get an up-close look at nearly three dozen developed and emerging startup ecosystems across six of the world’s seven continents and looking at the Thailand ecosystem has helped me to frame the issue in terms of a simple binary model: Silicon Valley vs. Seattle.

Silicon Valley vs. Seattle

Silicon Valley represents what I see as a relatively balanced startup ecosystem, where tech giants and fast-growing startups manage to compete yet co-exist in a delicate balance. While the balance of power lies with companies such as Apple, Google, Facebook, and numerous others, small and fast-growing startups sprout up constantly, and many have more than a fighting chance to reach scale and even compete head-to-head against the giants, sometimes even becoming a tech giant themselves.

This established and proven path of growth, profitability, and often exit has attracted and created a rich community of serial entrepreneurs continuously launching startups, and venture capitalists who will fund them, knowing that there are ample opportunities to make attractive returns on investment.

Silicon Valley inhabitants include a healthy mix of those who enjoy working for large, prestigious tech giants, and those who want to launch or work for dangerously risky and sexy, hair-on-fire startups, as well as a demographic of talent who have done both.

It is this fighting chance to compete and succeed against tech giants (and individual predisposition towards risk and “flying without a net”) that spurs a constant infusion of new entrepreneurial talent and ventures.

Cities like London, Tel Aviv, and Singapore have similarly balanced ecosystems, with startups able to nimbly navigate amongst large international tech companies, as well as large-cap corporations with massive capital budgets to direct towards their own innovation initiatives.

On the other side of the binary are cities such as Seattle, which at first glance deeply resembles Silicon Valley and the Bay Area: tech giants in the form of Microsoft and Amazon; strong local universities generating pools of tech talent; and beautiful cities offering attractive lifestyles, modern infrastructure, entertainment options, dining scenes, and outdoor diversions.

Also Read: How Thailand’s Ricult uses deep tech to improve the lives of smallholder farmers

But a closer look at Seattle’s tech scene reveals a surprising dearth of startups and venture capital firms. This isn’t to say that there isn’t a startup and VC scene in Seattle, or that startups and VCs there don’t scale or make money.

But relative to the explosion of activity in Silicon Valley, the level of new venture activity in Seattle is quite muted. Why is this?

I speculate that it is a combination of

  • Seattle’s homegrown tech behemoths Amazon and Microsoft (as well as other large tech companies with offices in the city) possessing such an overwhelming and lopsided balance of power relative to smaller tech ventures, which can stifle and smother startups before they can achieve sufficient scale to hold their own against the giants
  • a disproportionately large pool of tech talent that actually prefers the comforts, stability, generous compensation, and perks of working for a tech giant. This creates a tech ecosystem where tech activity is overwhelmingly centred around large tech companies, compared to a more balanced split between the tech giants and tech startups.
  • Additionally, amongst Seattle’s comparatively smaller startup ecosystem, activity is somewhat more tilted towards business-to-business (B2B) startups, much catering to Seattle’s numerous corporations and even the tech giants themselves, compared to the Bay Area, which harbours a more balanced split between B2B and B2C (business-to-consumer) startups. Seattle’s comparatively stronger focus on B2B startups means that entrepreneurial enterprises may involve longer sales and more measured growth cycles, and less the hyper-kinetic growth of their B2C cousins.

This brings us back to Thailand, and specifically Bangkok. For much of the past decade, Bangkok has seen a steady and gradual build-up of grassroots entrepreneurial activity and venture capital investment, but such growth has been more linear (measured in percentages) rather than the explosive, exponential growth (measured in multiples) that world is characteristic of an ecosystem on a rocket ship trajectory.

A look at Thailand’s startup ecosystem

New venture creation is still largely at the hands of first-time entrepreneurs instead of seasoned serial/repeat entrepreneurs, with some seed funding provided by a very small but growing community of angel investors, and the bulk of institutional seed capital coming from 500 TukTuks, the Thai arm of 500 Global (previously 500 Startups).

Also Read: Angel Investors: leading the charge for startup growth in Thailand

While the most prolific seed-stage investor at over 70 investments across two funds, TukTuks is only one firm that can only cover so much ground, and its aggressive investment strategy can only fund a fraction of startups that have been created in Thailand.

While several regional VC firms have invested in Thai startups, most of them have been at Series A rounds, after startups have validated their products and services and have created a workable monetisation model. At the idea or pre-revenue stage, seed capital remains in desperately short supply.

2016 was a bit of a watershed moment in Thailand’s technology and innovation lifecycle. That was the year where the concept of corporate venture capital caught fire and a plethora of corporate funds was formed.

Thailand’s telecom operators had been operating CVCs and accelerators for years, but with Thailand’s largest banks, industrial conglomerates, property developers, and Agri/food companies all piling into technology and forming innovation and venturing units, Thailand transformed into the one economy in the region where the bulk of the country’s innovation activity and capital was almost exclusively focused on corporate innovation.

This was incrementally beneficial to local startups, as some of these large CVC funds invested in a handful of local Series A and B rounds, but still very little support has flowed to the idea and seed-stage ventures. Corporate innovation activity was directed largely towards in-house transformation and overseas startup investment.

Where this corporate activity did have a tangible impact on the local startup scene was to vacuum up tech talent that was already in short supply. Every tech ecosystem in Southeast Asia screams for evermore tech talent, from developers to salespeople, desperately raising funding rounds so they can outbid and outcompete for talent.

But when corporates form innovation and venture building units, they exacerbate these talent shortages. Cash-poor, ramen-eating entrepreneurs now need to contend with deep-pocketed corporates who hire by the dozens, in effect sucking out the oxygen from startup growth aspirations.

Large, sexy tech operations like Kbank’s Kasikorn Business-Technology Group (KBTG) or SCB’s Digital Ventures are very attractive career options for young, Thai, risk-averse tech workers who want to work on cutting edge technology projects but with the security that a large-cap, the blue-chip corporate can provide, in much the same way that Amazon and Microsoft are sexy-but-safe options for their Seattle counterparts.

Also Read: Flash Express adds US$150M more to its kitty, becomes Thailand’s first unicorn

SCB’s mega-reorganization represents another watershed moment, not just as a signal for how technologically savvy, aggressive, and woke a Thai corporate can become, but also for the tidal wave of forces it potentially unleashes.

As mentioned, banks and corporates across the Thai landscape had their “Oh, crap!” moments in the days that followed the SCBx bombshell, re-examining their own innovation and transformation strategies (and undoubtedly realising that much of it is more hype than real disruption, more sizzle than steak), and trying to figure out how to compete in the tech/innovation/disruption arms race that SCBx has touched off.

Competition for local limited partner capital will heat up tremendously; expect that Krungsri Finovate’s recently-announced startup private equity trust fund and the soon-to-be-formed US$600-800 million CP Group/SCBx venture fund will compete aggressively for corporate investment funds, family office money, and retail investor savings that might otherwise have gone to equity crowdfunding platforms or institutional seed funds like a 3rd 500 TukTuks fund or emerging angel syndicates.

Expect other Thai corporates to announce reactive and copycat innovation and transformation strategies in the coming months, giving birth to the next wave of both corporate venture capital and corporate venture building units.

Thailand has the potential to become a regional tech hub, but one dominated by large tech-oriented corporates rather than a community of startups. Hence, Thailand has a Seattle Problem.

Now, when I use the word “problem”, this is a bit of hyperbole. Seattle isn’t a “problem” in the negative sense, but rather in an unexpected, unintended, or divergent outcome sense. Seattle is a fabulous city (after a recent visit there a few weeks ago, I dare to say it might even be my favourite in North America), and its thriving tech scene, dominated by giants as it is, has led to the robust economic growth and development that has made it one of America’s great cities.

Also Read: How Thai food supply chain startup Freshket weathered through the pandemic

Bangkok is similarly becoming a vibrant, cutting edge tech ecosystem overwhelmingly dominated by large players, but from the standpoint of new venture creation, entrepreneurs looking to launch startups in Thailand could find the local ecosystem a desolate desert dried up of resources, with capital and talent flowing into those large corporates without any trickle-down to smaller, entrepreneurial enterprises.

Not necessarily a bad outcome if we want to emulate Seattle, but not so great if we want to follow Silicon Valley’s path.

This is not to say that it is all doom and gloom if we want to create a vibrant community of startups to balance our growing community of corporates-turned-tech-giants.

I have a few ideas on how our ecosystem might tilt the balance a bit more towards grassroots entrepreneurship, boost new venture creation, and give Thailand’s most embryonic startup Davids a fighting chance against its corporate Goliaths:

  • The Thai government needs to wake up and realise that nationalism and patriotism is a detriment to our Thailand 4.0 aspirations. Erecting barriers to foreign entrepreneurs and talent to come into this country doesn’t protect Thai startups, but rather hobbles them. We can either create a hyper-competitive yet vibrant ecosystem of both local- and foreign-founder startups, or a small, static, protected tribe of local startups that make little to no headway against Thailand’s emerging corporate/tech behemoths. I say open the floodgates and welcome all-comers who want to call the Thai startup ecosystem home. This means wholesale immigration reform, including a redesign of current smart visa initiatives, which are great in concept, but whose execution leaves much to be desired.
  • Also, the Thai government needs to create attractive and feasible incentives that would spur regional VCs and Thai corporates to invest in the high-risk idea and seed-stage ventures, which could come in the form of co-investment, profit sharing, first loss capital, and tax exemptions, among others. Resources should also be directed towards building, training, and incentivizing a community of angel investors to provide seed capital.
  • Government agencies and universities also need to find creative means of providing grant capital and non-monetary services that could substitute for equity seed funding to get new ventures from zero to one and survive and scale just long enough to reach the early-stage Series A investment window that will draw in traditional VC funds. In fact, displacing seed and angel funds with grant and non-monetary resources could create investible startups without the baggage of messy cap tables that so often ward off regional VC from the Thai early-stage investment scene.
  • Alternatively, Thailand’s universities could consider establishing university venture capital funds, or UVCs, similar to those that have been set up by universities in the UK or the US. If integrated with university startup accelerators and technology transfer offices, along with the government and universities modernizing intellectual property rules and regulations that would share the spoils of innovative research with contributing faculty and students, we might see a proliferation of entrepreneurial activity coming out at the university (or even high school!) level, baking in entrepreneurial expertise, aptitude, and appetite earlier on in Thai people’s career development, steering them towards more daring career paths instead of just safe, conservative, conventional routes.

Also Read: Conicle bags US$3M Series A to grow its ‘cloud university’ in Thailand

There is an old Chinese curse that is often confused for a blessing: May you live in interesting times. Looking at the trajectory of the Thai tech and startup ecosystem, it is hard to deny that we are living in interesting if not exciting times, but rather than looking at that as either a blessing or curse, we might view that as a challenge or call to action.

Likewise, Thailand having a Seattle “problem” can be either a good thing or a bad thing, but it is best that we look at it as a challenge or divergent outcome if we are looking to grow our ecosystem and calibrate it for new venture creation.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: anekoho

The post Thailand’s startup ecosystem has a Seattle Problem. And that’s not such a bad thing appeared first on e27.

Leave a Reply