2020 has been a very challenging year for all businesses, particularly startups that are still struggling to get a foot in. With production lines affected by movement restrictions, a precarious market with shifting consumer demands, and the difficulty of securing funding due to all the austerity measures, startups are some of the hardest-hit companies in the world.
In Thailand, many companies have shown initiative that have yielded positive results despite COVID-19. A number of Thai startups managed to adjust their business models in order to survive, while others have gone through mergers, such as Lineman and Wongnai, to strengthen themselves and better compete with larger companies. There were also collaborations to develop services that specifically tackle the pandemic, such as the “Ped Thai Su Phai” Facebook page, which uses technology and innovation to address social problems, provide correct information, reduce the burdens of health workers, and generally help the public sector handle the pandemic.
Challenges when it comes to government support
However, despite these initiatives, many startups still struggle to cope with the new normal, especially in the tourism, event management, and food and beverage spaces, as well as other offline service sectors. Whereas many services have successfully shifted to virtual or online platforms or have pivoted to offer pandemic-specific services that address people’s needs during the crisis, startups in these key offline service industries are having a much harder time than their online counterparts.
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Although Thai startups received better support from the public and private sectors this year, their growth still did not match up with startups in other countries. Pattaraporn Bodhisuwan, President of Thailand Tech Startup Association, TTSA / CEO and Co-Founder of Eventpop, said a lack of support and assistance was the main reason why Thai startups did not grow as much as large foreign competitors.
Most platforms and services currently used by the Thai public sector are developed by foreign companies. For example, the Thai Ministry of Public Health recently collaborated with Agoda to launch a platform for Alternative State Quarantine hotel reservations. Mr Pattaraporn explained that there are several Thai startups with similar platforms and services and that were equally effective but were not chosen by the Thai government. He therefore urged the public sector to give support to Thai startups more, not only to help them grow and strengthen them, but also to better address the specific needs of Thai people. By not choosing Thai platforms and services, the government entrusts the important data of Thai users to foreign companies, exposing the people to many potential data risks.
Moreover, Mr Pattaraporn said that Thai startups managed to receive more attention from public and private agencies whose efforts to promote Thai startups so far have focused on collaboration on startup acceleration such as SCB10x, Kasikorn X etc. rather than funding.
Funding from investors is another big challenge for Thai startups in 2020 because many investors have decided to delay funding early-stage startups from January to October this year. Compared to an average of 30-35 startups each year, funds were mobilised for only 16 startups in 2020.
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Increased support from both public and private sectors
On the government’s side, support and assistance have been provided for new startups to help them enter the ecosystem. Nevertheless, there are some government agencies that still have limited knowledge of how startup businesses work, resulting in regulations and government assistance that are off target.
“There were proposals for the government to use services by startups at ministries as well as campaigns for amendments to some laws, so that Thai startups would attract more foreign investors. The National Innovation Agency (NIA) has launched measures to give startups funding with no strings attached and educate them in various aspects,” explained Mr Pattaraporn.
On the future of Thai startups in 2021, the TTSA president said startups should pay more attention to their finances and performance as well as revenue channels, cost control, and accounting in a bid to boost investor confidence. He further advised that startups should find ways to create their own strengths by cooperating with the private sector or large corporates or ask the government to use their services more. Thai startups should also join hands to help one another in expanding services and exchanging knowledge, he said. Pattaraporn added that the TTSA is hard at work to foster and nurture a larger startup community for Thailand.
Thai startups also urge for a limit on foreign ecommerce companies’ e-marketplace share in the Thai market, as well as the enactment of an anti trust law to prevent monopoly. They also call for a policy to stimulate the use of Thai startups’ services, especially by the government, saying that the government should set an example for people to follow and encourage Thai consumers to choose services developed by Thais for Thais. Also, Thai startups have made a request for more business-matching initiatives between Thai startups and other private companies.
Moreover, Thai startups have requested the government’s assistance in four areas, including public relations for its projects to support Thai startups and measures to provide thorough assistance for them, ease of doing business, easy access to information and services of the government, and support for skilled professionals particularly developers and programmers.
Entering the negotiating table, laws that seek to support the startup ecosystem are now being considered and are being discussed to find mutually beneficial resolutions that both sectors may agree upon. Some examples of the laws include laws on the ESOP — Employee Stock Ownership Plan, vesting, and convertible note, among others.
In his capacity as the president of the association, Mr Pattaraporn said he is continuously following up on the progress of all of the proposals in cooperation with National Innovation Agency (NIA).
The future growth of Thai startups is the direct product of cooperation between three parties: startups, the government, and the private sector. The cooperation of each component is key to developing the Thai startup ecosystem, and helping startups become at par with their foreign counterparts. With this cooperation, the NIA hopes to help bring Thai startups to the global market.
Visit the Startup Thailand Marketplace at ecosystem.startupthailand.org for updates on the Thailand startup ecosystem.
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This article is produced by the e27 team, sponsored by the National Innovation Agency of Thailand.
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