Thai start-up sector tipped to double in value as support grows
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The size of the Thai start-up sector is expected to double this year, with especially high growth potential seen in the areas of fintech (financial technology) and tech for the healthcare, logistics and retail industries.
Meanwhile, US tech giant Cisco is investing more than US$100 million (Bt3.5 billion) to support start-ups in Asia-Pacific.
The Thailand Tech Start-up Association (TTSA) has predicted that the overall value of the start-up market in the Kingdom will double to more than Bt20 billion, with over 600 start-ups by the year’s end.
The main factors driving this growth are people’s increasing access to information technology, government support for innovation and start-ups, and a rise in venture capital and private-sector support.
Oranuch Lerdsuwankij, chief executive officer of start-up website Techsauce, said the sector would expand strongly this year due to collaboration and support from the private sector and government bodies such as the Bank of Thailand (BOT).
The central bank has issued a consultation paper on “FinTech Regulatory Sandbox Guidelines”, with the purpose of the regulatory sandbox being to allow business operators to test their financial products or services in a live but limited environment, without being fully subject to all the requirements that are normally applicable.
Through the sandbox, the BOT aims to facilitate new financial innovation while still ensuring consumer protection and financial-system stability.
The central bank’s regulatory sandbox can offer its fintech products or services to consumers within the limited scope as approved by the BOT under somewhat lenient rules, as specified by the bank on a case-by-case basis.
Start-up contests and events will also play an important role in driving the growth of start-ups as a whole, Oranuch said.
Moreover, the banking industry this year will provide much more direct investment or create limited partnerships in fintech start-ups, she said, adding that the arrival of Alibaba in Thailand is another important factor that will benefit small local fintech developers.
Corporate businesses such as banks and other financial institutions will increasingly develop accelerate programmes to support start-ups, and work with fintech start-ups to seek ways to provide better financial services to support their customers’ lifestyles and behaviour, the CEO said.
“Start-up contests and events will also play an important role in driving the growth of start-ups as a whole, Oranuch said.”
The TTSA will also ask the government to support start-ups in terms of a capital-gains tax exemption to drive the growing sector as a whole.
Vatsun Thirapatarapong, managing director of Cisco Systems (Thailand), said Cisco was investing over $100 million in Asia-Pacific start-ups with good potential via a venture-capital operation named Monk’s Hill Ventures (MHV).
Besides investing in countries such as China, Singapore and Malaysia, MHV has invested in two Thai start-ups, one in the field of logistics and the other in gaming.
The company will utilise a start-up’s solution and product, as well as bundled start-up services, application and platform, with Cisco’s own products to expand the business both locally and on the international market, the MD explained, adding that Cisco had started to invest in Thai start-up businesses a couple of years ago.
Acting as an enabler
“We want to see start-ups that utilise information technology to support disruptive business, such as in the logistics area by developing an application to support logistics optimisation. We are an enabler to support start-ups in terms of training and consulting, and as a marketing arm,” Vatsun said.
Wiwat Wongwarawipat, president of InStep group – a product development services firm – said there was high growth opportunity for start-ups in Thailand catering to the financial, healthcare and retail industries, since user behaviour was rapidly changing in terms of people accessing new technology to support and improve their quality of life.
Wiwat has personally invested in four Thai start-ups in the fintech and health tech areas.
Moreover, his company is planning to set up a venture-capital operation to support local start-ups in in high-potential areas, including fintech, health tech and innovative tech for the logistics and retail industries.
Questions & Answers
Q.What is the expected value of the Thai start-up market by the end of this year?
What is the expected value of the Thai start-up market by the end of this year?
The Thailand Tech Start-up Association predicts the overall value of the market will double to more than Bt20 billion. This expansion is expected to include over 600 start-ups by the year’s end.
Q.How does the Bank of Thailand's regulatory sandbox support financial innovation?
How does the Bank of Thailand's regulatory sandbox support financial innovation?
The sandbox allows businesses to test new financial products or services in a live, limited environment. This facilitates innovation by easing some normal requirements while still aiming to protect consumers and maintain financial stability.
Q.What kind of support is Cisco providing to start-ups in the Asia-Pacific region?
What kind of support is Cisco providing to start-ups in the Asia-Pacific region?
Cisco is investing over US$100 million in start-ups with good potential via its venture-capital operation, Monk's Hill Ventures. It also plans to utilise start-up solutions and services with its own products to expand business.
Q.What specific areas show high growth potential for start-ups in Thailand?
What specific areas show high growth potential for start-ups in Thailand?
There is especially high growth potential in fintech, and in tech for the healthcare, logistics, and retail industries. This is driven by changing user behaviour and increasing access to information technology.
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