Thai startups must mull SEA expansion, says expert

Thai startups must mull SEA expansion, says expert

A top official of a leading venture capital firm has underscored the need for Thai startups to enter the Southeast Asian market in order to attract high-value investments.

The Southeast Asian region has seen the growth rate for investment double in 2017 and has attracted a large number of investors.

"Startups in Thailand still mainly focus on the domestic market, similar to those in Indonesia, Philippines and Vietnam. Firms from Singapore and Malaysia have higher ambitions for regional expansion and thus rake in more investment," said Jeffrey Paine, founding partner of Golden Gates Venture, a Singapore based venture capital firm.

Mr Paine is also one of the mentors at DTAC Accelerate, an incubation programme for startups.

"A larger market is more attractive to investors," he said, addressing a group of Thai startups recently.

In Thailand, Golden Gates Venture will continue to provide seed funds to Series A startups, worth from US$250,000 (8.33 million baht) to $2 million per company.

The business-to-consumer (B2C) market is more interesting than business-to-business (B2B) because of its scale and can draw bigger funds. The B2B market is considered safer for investment, but growth is limited because of the constrained user base.

Mr Paine said blockchain, artificial intelligence and initial coin offering have high potential for growth.

In addition to B2C and fintech, he said his company is also interested in investing in media, entertainment, education and healthcare.

The company today has a $60 million fund size, of which $4 million has already been invested in Thailand.

Golden Gates started investing in 2011 and has so far funded over 30 companies, six of them being Thai startups.

Mr Paine's firm plans to invest in ventures whose founders can offer coaching and professional services in markets that are is large enough to gain revenues.

In 2016, most investors cooled down their investments and adopted a cautious approach.

Mr Paine said the expected return period for a seed fund is about 7-10 years with the failure rate on an investment in Southeast Asia being 60%, which is 30% less than the United States.

"There are more players entering the scene, so startups really need to be unique," he said.

Singapore, Hong Kong and Malaysia are the top three markets in terms of regulations for venture capital, followed by Thailand.

"Capital gains taxes should be waived, and employees should be allowed to have stock ownership and convertible bonds in Thailand," Mr Paine said.

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