HomeInterviewThai venture capitalists grow more cautious

Thai venture capitalists grow more cautious

But investments continue in hope of successful startup environment

Thailand’s corporate venture capital (CVC) sector will rebound faster than initially expected, according to the Thai Venture Capital Association.

“Funds are still available in the CVC sector and the COVID-19 situation has already eased considerably. By now, it is also clear which businesses would enjoy a boost and which face negative impacts from the COVID-19 crisis,” the association’s president, Thanapong na Ranong, said in an exclusive interview with The Story Thailand.

Thanapong, who is also managing director of Beacon Venture Capital, said startups that know how to ride emerging trends and have growth potential are likely to receive capital support from CVCs.

However, he made it clear that CVCs will be more careful about their investments. Not only will they examine startups’ products, services and teams, but they will also have serious regard for the overall economic situation and external factors.

“So startups should prepare themselves well for pitching [their cases],” he said.

Support for Startups in Seed Round

Thanapong said that the size and activeness of Thailand’s CVC sector ranked highly in Southeast Asia. However, the majority of Thai CVCs focused on strategic investments.

“Strategic investments are made to help startups grow faster. This means most CVCs will only invest when they have already seen good products come from a startup,” he said.

Meanwhile, most Thai startups are still at the “seed round” stage of investment, in which a number of investors may “seed” a new company with money that is often used to support market research and early product development. Startups at this stage have rarely received funding from CVCs, and most of them rely on government support.

Thanapong said he believed the government should invest more in seed-round startups so that they could progress to Series A, where they could meet many CVCs.

To help startups in the seed round, the Thai Venture Capital Association, the National Innovation Agency and the Technology and Innovation-Based Enterprise Development Fund (TED-Fund) are now discussing a plan to set up a matching fund.

Prospects for Series C Startups

Thanapong said startups that had worked their way up to Series C would be keen to attract big investors, but most of these were foreign organizations.

“These investors generally look for business models that work well not just in Thailand, but beyond,” he said.

Therefore, startups need to plan clearly whether they want to expand into overseas markets. If they are content to hope for business expansion within Thailand, they can take out a bank loan or register themselves on the Thai stock market. In such cases, they may need help with accounting and paperwork.

“Beacon Venture Capital can help them to restructure their organizations so as to boost their chances of getting a loan or entering the stock market,” Thanapong was quick to point out.

Building a good ecosystem for Thai startups

The Thai Venture Capital Association President said that Thai startups generally pursued ideas similar to those of foreign startups, so there was no big opportunity for them to grow overseas. It was good enough, in his view, for Thai startups to settle well into the Thai market and prosper.

“After all, if they are good operators, this will mean new innovations, more jobs for people, and the creation of a favorable climate in which Thai startups can thrive and grow,” he said.

“Investors will be happy enough if the startups they support can enter the stock market.”

One hurdle, however, is the lack of success stories in Thailand to attract more talent into startups. “For startups to successfully go to and grow in the market, we need to attract more talented people,” he said.

His hope is to see current startups achieve success, so that their success will strengthen Thailand’s ecosystem for new startups.

“Successful startups should consider investing in newer startups, or launching new startups themselves. Such a cycle would keep the ball rolling,” Thanapong said.



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