Thailand's unicorn factory

Thailand's unicorn factory

A local startup incubation blueprint headed by the National Innovation Agency aims to turn some small businesses into billion-dollar valuations,

Digital tech businesses have bright growth prospects, according to an NIA analysis.
Digital tech businesses have bright growth prospects, according to an NIA analysis.

The National Innovation Agency (NIA) has designed a new strategy to support local startups, facilitating their development and enabling them to keep pace with innovation demand in global markets.

The agency's goals are to increase the number of innovation-based enterprises (IBEs) and turn Thailand into a top 30 leading innovation nation by 2030.

It is crucial to promote the transformation of entrepreneurs into IBEs by ensuring everyone has access to the knowledge sources, capital and infrastructure necessary to create innovations, NIA executive director Krithpaka Boonfueng told the Bangkok Post.

This development will lead to sustainable impacts on both the economy and social aspects of Thailand, she said.

There are 2,100 startups in Thailand, of which 700 are in the pre-seed funding stage and 1,400 are in the go-to market and growth stage.


To drive Thailand's innovation and align it with the global context, NIA's new strategy is called "Create the Dot -- Connect the Dot -- Value Creation". Ms Krithpaka said it focuses on: groom, grant and growth mechanism.

She said the strategy uses a "2 reduce, 3 increase" approach to reduce bias related to startups and small and medium-sized enterprises, as well as reduce barriers to access and innovation use for all sectors.

Ms Krithpaka said the approach aims to improve three areas: opportunities to access funding sources, the number of innovators and IBEs offering jobs, and IBEs' capability to create innovative Thai brands.

Ms Krithpaka says the VC funds are still huge enough to support the startups ecosystem, but they will invest on selective basis on the startups which have operating transparency and real potentials.


Global uncertainties, a stagnant economy and a shift of focus to more sustainable business models were behind the drastic drop in startup funding in recent years, according to NIA.

However, the number of deals in 2023 recovered, especially total deal flow in the first half of the year in the region.

The number of deals in Southeast Asia skyrocketed to 488 with a total investment value of more than US$4.3 billion, according to the Thai Venture Capital Association.

In 2024, roughly 20-30 billion baht will be invested in Thai startups, from both local investors and overseas, according to the agency. The Southeast Asia market is expected to rebound, with Thailand holding high investment potential, said the NIA.

An NIA analysis found the Thai startup ecosystem outstanding in a few areas. One is the number of university holding companies is rising. Business models by Thai startups have become more varied, especially among deep technology firms, which have mushroomed to 65 in three years.

A university holding company is a private entity established separately from the school to manage investments in innovative businesses that are spun off.

With Thailand prioritising sustainability, this paves the way for startups to look for opportunities to develop innovative climate solutions.

Local generative artificial intelligence (AI)-based startups are expected to attract investment by venture capital (VC) funds of around 6 billion baht this year, roughly half the total value of VC investment from both Thailand and overseas.

Digital tech businesses are popular and have bright growth prospects, according to the agency.

As generative AI is becoming a public technology, more than 80% of enterprises are expected to use it and other applied models in manufacturing operations by 2026, noted NIA. In early 2023, less than 5% of enterprises used such technology.

The large markets in Thailand and Southeast Asia should also draw startup investment in the near term, said the agency.

Doing business in Thailand is convenient and costs are reasonable, while the technological infrastructure is ready to support business operations, said Ms Krithpaka.

The cost of startup investments in Thailand is not high compared with other countries, she said.

More AI applications will likely appear in Thailand this year, covering business analytics, market analyses, medical process improvement, education and job creation, noted the agency.

This year, NIA has received about 150 million baht in research grants from Thailand Science Research and Innovation.

Local generative AI-based startups are expected to attract investment by VC funds of around 6 billion baht this year.


Ms Krithpaka said VC funds are still large enough to support the startup ecosystem, but they will invest on a selective basis in startups that are transparent and have real potential.

She said five rising sectors for startups comprise agriculture, food and herbs; health and medicine; soft power; climate tech; and tourism. All of these have the potential to draw foreign investments, said Ms Krithpaka.

The NIA plans to provide startups with various forms of assistance, such as financial support for innovative business development, platform support for entrepreneurs to conduct their business, and promotion of their collaborations with Thai and foreign agencies.

The current tools used to support startups include the smart visa scheme to attract startups, investors and professionals from overseas, engaging them in Thailand's innovation development.

In addition, Global Startup Hub has been set up to help establish startups in Thailand.

The agency also created new projects to upgrade Thai startups, including a matching fund in the form of a grant or soft loan. It is a collaboration between the government and the private sector led by VC investors, with a maximum size of 20 million baht. Three VC funds are interested in joining the fund, said Ms Krithpaka.


Despite the attention of VC firms, there are several roadblocks for local startups, including difficulty in accessing funds, lack of sufficient infrastructure support, and a shortage of highly skilled workers and consultants to help companies move from the seed stage to the growth stage.

Thailand has few early-stage startups, as having accelerators and VC to invest in them is essential to create an early-stage pool, she said.

To promote early-stage startups, they need to access funding, which means providing more flexible policies to woo investment, supporting talent development, and promoting cooperation with university communities, said Ms Krithpaka.

Thailand needs to create more successful local entrepreneurs and global network partnerships, as well as a group of people with a global mindset, she said.


Over the past three years, Thailand recognised three unicorn startups: Flash Express, Ascend Money, and most recently Line Man Wongnai.

Ms Krithpaka identified Thai startups with growth potential as MyCloud Fulfilment, QueQ and Freshket, while three Thai VC firms looking for investment opportunities in local startups are Krungsri Finnovate, InnoSpace and Beacon VC.

She acknowledged Thai startups emerge every year, but many die quickly.

The fintech sector has been around for a while and remains a rising star, said Ms Krithpaka. NIA believes fintech startups will grow to produce new unicorns, she said.

The agency is planning a "unicorn factory" project to efficiently incubate and promote local startups by seeking VCs and partners for them, while helping them expand in overseas markets.

The project was proposed to the higher education, science, research and innovation minister, while the NIA is drafting a formal proposal, said Ms Krithpaka.

The agency believes a startup bill, expected to be implemented in the near future, could shape the development of the sector, she said.

Ms Krithpaka said the unicorn factory project is projected to be implemented this year.

The project does not require a large budget, only 20-30 million baht, with the NIA acting as the project incubator to help local startups grow through market expansion and matching with VC partners.

The startup bill calls for the agency to be a conductor providing one-stop service for local startups, driving promotional measures and providing various benefits, such as making connections between startups and government or private agencies.

She said the NIA expects to see Thai startups as the first choice of government and large corporations for their product or service procurement.

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