New trend goes beyond consumer apps to making an impact in niche industries
Tech start-ups should gear themselves to advanced and deep tech if they want to have a long-term social impact, according to industry watchers.
Thailand’s start-up ecosystem has the right momentum to continue to grow, including healthy support from large corporates, and the country is in the spotlight of global investors. However, aspiring tech entrepreneurs need to be aware of the lack of tech talent and regulators, as well as the risk and uncertainty from the political situation.
Thailand’s tech start-up ecosystem has been developing well and is quite mature. For example, total start-up fundraising in Thailand in 2017, excluding initial coin offerings (ICO), was worth around US$105.55 million (Bt3.37 billion), with the largest deal being aCommerce’s Series-B fundraising of $65 million. Of 30 deals, from seed to series-B, 29 involved traditional venture capital while only one drew from the new ICO approach.
This new source of fundraising first emerged in Thailand last year, when OmiseGo raised $25 million in start-up funds in 2017.
There has been a major increase in the number of large corporates investing in or otherwise encouraging start-ups, through their own initiatives or through collaborations, said Oranuch Lerdsuwankij, chief executive officer and co-founder of Southeast Asia’s largest tech conference, Techsauce Global Summit.
While telecom companies and banks were the first two sectors to gear up for involvement in start-ups, other corporates have been rolling out innovative start-up projects, including SCG, PTT and Mitrphol among others.
These large corporates recognise the importance of innovation for their new S curves, and so are building projects that support start-ups. The shift was one of the key factors driving the start-up ecosystem in Thailand since last year, said Oranuch.
These trends have led to creation of new niche start-ups in agriculture, healthcare, and food. That’s a good sign for the overall development of the country, since it creates social impacts and can address the problems experienced by the nation’s core industries, Oranuch said. These recent innovations go beyond creating yet another mobile app.
“Start-up founders are not new faces without business experience,” she said, “but have their own domain expertise, experience, and know-how. They see real problems and they come to develop innovative technology to address the problems. Meanwhile, the large corporates in the core sectors move to support these start-ups, and that helps to create yet more new start-ups that come with domain expertise rather than having to come up with the ideas.
“This momentum will create sustainable social impacts in the long term, though it might not see results in the short term. It takes some time,” she said.
“Meanwhile, more start-ups in Thailand have started to use advanced technologies to help solve social problem such as big data, artificial intelligence [AI], machine learning, and deep tech,” she added. “It needs collaboration from academics, like at the Massachusetts Institute of Technology and Carnegie Mellon University.”
One result is a trend toward start-ups in Thailand working on B2B2C (business to business to consumer) solutions, he said, though B2C start-ups also continue to grow, but the number of B2B start-ups is rapidly increasing. The participation of large corporates should lead to the creation of many more B2B2C start-ups.
Meanwhile, Krating Poonpol, fund manager of 500 TukTuk, the well-known source of venture capital for Thailand’s start-ups, said that the industry could expect double the start-up growth compared to last year in Thailand. That growth will be spread across the major business sectors including travel, finance, insurance, healthcare, education and agriculture.
However, a big challenge lies ahead due to the lack of available tech talent at exactly the time when a spurt in start-up growth is expected. That could prove a major threat for Thai start-ups in 2019.
“Investors are now looking at and comparing Thailand and Vietnam, and if we are not ready in terms of tech talents and local regulations in time, it might lead to a discounting of Thailand’s score,” said Krating.
He said Thailand has the potential to be seen as the proxy wall for tech giants like Line, Facebook, Alibaba, and Tencent, with the impact of this becoming apparent by 2019.
The government needs to consider regulations that facilitate and encourage Thai start-ups to be able to compete against the giants. Meanwhile, Thai start-ups themselves need to be aware and adjust themselves in order to co-exist and grow along with these giants. “The coming of giant players will change the game in the consumer market, thus start-ups need to adjust themselves to deal with this situation,” said Krating.
Venture company 500 TukTuk has invested in start-ups for almost three years now, putting money into 50 start-ups, of which around half of them later received high funding for a combined investment of Bt400 million. “We have some money for
follow-on investments and we are now ready to continue with those investments,” said Krating.
Need more females
There is a need for more female leaders in tech, said Oranuch, who wants to see a better gender balance.
She said there is a growing requirement for more females to move up the ladder in the tech industry in Southeast Asia since there is nowhere near enough diversity when it comes to the number of men and women becoming CEOs, CFOs and company presidents.
“Diversity is necessary for any industry, but particularly the tech industry,” Oranuch said. “Women are strong when it comes to project management and negotiation, both of which are very important in tech. I know it’s not easy but I would like to call on more females across Southeast Asia to get involved in what is a rapidly evolving industry with plenty of opportunity. Women wanting to progress in a career in tech need to believe in themselves more and realise they can do just as good a job, if not better, than men particularly when it comes to becoming leaders of tech companies and organisations,” she said.
According to a recent report, “The Future Tech Workforce: Breaking Gender Barriers” by global technology association ISACA, the top five barriers currently faced by women in the tech industry are lack of mentors, lack of female role models in the field,
gender bias in the workplace, unequal growth opportunities compared to men and unequal pay for the same skills.
Thailand’s first-ever destination conference on global innovation will feature four major events for Innovation Week from June 16 to 26.
The conference kicks off with Thailand Start-up Week, running June 16 to 20, featuring 60 meet-up events for the start-up community at co-working spaces throughout the country. Next up will be Corporate Innovation Day on June 20, which is co-hosted by Techsauce, Hubba, and Techstars.
The largest component event will be Techsauce Global Summit 2018, running June 22 and 23, which is expected to have 10,000 participants, up from 6,000 people in last year, along with 500 venture capital firms and over 1,000 start-ups.
“Now Techsauce Global Summit is among the top three tech events in Asia,” said Oranuch Lerdsuwankij, chief executive officer and co-founder of Southeast Asia’s largest tech conference, Techsauce Global Summit “The ‘Start-up Pitch’ is one of the highlights. This year is the first time we did a roadshow in Europe to invite start-ups from all around the world to do their pitching here. As of now, we have 22 start-up teams and they continue coming in.”
ICO Start-up: Six Network
Six Network originated from Ookbee U and Korean Yello Digital Marketing Global Pte Ltd. It uses blockchain technology to
reinvent the digital and creative economy by building a better infrastructure. The Six Network token sale successfully ended on May 31, after a pre-sale began on April 3, with around 520 million circulating six tokens (from the 1 billion total tokens) sold out. Each token was valued at 10 US cents.
Thousands of investors from over 61 countries contributed to the token sale, including more than 1,000 Korean investors, over 700 Thai investors, and investors from all over the world including the UK, Russia, India, Indonesia, Germany, Japan, the Netherlands, Vietnam, Belarus, Ireland, Israel and more.
According to the official blog of Six Network, it had joined with 10 meet-ups and had several community sharing sessions in Thailand, Korea, Japan, and Indonesia, bringing out over 3000 participants in total for the events. Meanwhile, over 30,000 people showed interest across social media, such as Facebook and Telegram, with most coming from Korea, Thailand and China.
Natavudh Pungcharoenpong, co-founder and co-CEO of Six Network, said that after the ICO sold out, it would next distribute a Six coin beginning June 6 and then launch a coin exchange later on.
Six Network aims to create and operate Six as a utility token for use by participants in the emerging innovative and digital sectors of the new industrial landscape – not only in Thailand, but also throughout Asia and, ultimately, across the world.