Why unicorn status is a distant goal for Thai startups

Thailand has moved up the rankings of startup-friendly countries this year but trails Singapore, Indonesia, and Malaysia within the region.

Thailand ranks 52nd globally, 11th in the Asia-Pacific, and fourth in Southeast Asia.

This year's statistics seem to be more optimistic than in previous years. However, Thailand’s track record in fostering unicorns — startups worth $1 billion — has been quite dismal. In more than a decade, the country has only produced three unicorns — Flash Express, Line Man Wongnai and Ascend.

Can Thailand foster more unicorns? 

A great idea without a well-defined business model cannot go very far.

Over the years, we've seen some talented Thais return home after overseas stints to develop new technology for domestic use. Thai startups, like those in the United States, are motivated by a desire to develop products for the Thai market and employ technology to alleviate pain points.

But why do only large corporations survive and thrive, while many startups appear briefly on the horizon and disappear inexplicably?

Very often, the failure of these startups can be attributed primarily to the lack of a well-defined plan. They lack the wherewithal to cope with unexpected economic instability. Those with an effective business plan may weather the storm, but they are unable to make enough progress to be able to break through the unicorn barrier. 

Jitta Dot Com Co.,Ltd is a middle-market firm with a well-defined business plan that has allowed us to be in business for 11 years and on track to for a 12th year, with stock analytic technology for the global market. We keep evolving to address the pain points of investors demanding more than just information.

Jitta Wealth Asset Management Co.,Ltd has employed technology to manage our clients’ investment portfolios with simplicity and at an affordable fee. This is not only enhancing customer’s wealth but also providing a funding source of income for the companys’ long-term sustainability.

Capital support

For startups to succeed, they need VC (Venture Capital) and CVC (Corporate Venture Capital) support for an efficient ecosystem.

VC and CVC are the key elements of successful business startups and drive them to higher planes.  

As a good example, consider Thailand. There are many CVCs because large corporates frequently acquire startups as a way to quickly gain access to new and cutting-edge technologies.

Being a part of one of these corporations can assist startups that might otherwise struggle on their own. While joining a big company would undoubtedly provide resources and know-how, there is a major risk of the startups losing their uniqueness and identity. A huge firm may not fully grasp the startup's identity, which is a drawback. 

Under the corporate umbrella, startups should be required to adapt to a number of constraints such as performance evaluation, risk management, and income generation, all of which are unsatisfactory to the companies and eventually, it’s game over. 

They may not be wary of accelerators until they have unpleasant experiences and get blown away by major organizational transformations.

Last but not least, it's debatable whether or not government support is necessary to elevate startups to unicorn status.

Government's role 

A recent study by Deloitte Consulting titled "The Future of Thai Startups and Venture Capital" found that many Thai startups are now having problems staying competitive and thriving. 

In terms of funding and ecosystem, government schemes to support entrepreneurs fall short. Thai startups are still small and have not developed significantly. 

Thailand must encourage new business growth while also leading the way in resolving ecological issues with a domestic ecosystem by collaborating on the integration of the government and business sectors, including adequate funding channels.

In recent years, Thailand has seen the emergence of numerous startups; however, only a limited number have achieved significant success, while the majority have remained in a relatively moderate position. 

Despite pushing mid-sized businesses to the top of the pyramid, the government continues to encourage startups in their early phases, known as the "seed stage”, which deters Thai startups from growing and progressing to the next level. 

In contrast to the US market, the Thai market is distinct. American customers are prepared to support companies that make high-quality goods. Therefore, marketing budgets are not as important for them as they are for Thai startups in terms of product awareness and trial. 

Instead of bringing in more customers for startups, the government could offer a scheme to enhance businesses and build technologies. However, this isn't a robust support ecosystem for the next stage of significant growth.   

Once the business model has been established and begins to thrive, the government should step in to support it so that the company can continue to expand responsibly and reach a unicorn or IPO level.

Finally, to foster growth in Thailand's startup ecosystem, all parties — both the public and private sectors — must collaborate to create promising startups that can attract both domestic and international VCs to invest in and develop innovations that will satisfy people's needs and create sustainable growth.