Local startup deals down, funding surges
Investment focuses on growth stage
The number of startup funding deals plunged to 30 in 2020, down from 41 the year before, due to the pandemic as investment focused more on companies in the growth stage, according to tech media Techsauce.
However, the total investment in local startups surged to US$364 million (11.4 billion baht) last year, up from $109 million in 2019.
Since 2012, $845 million has been invested in Thai startups.
“The pandemic has taken a toll on startups. The impact on some sectors, such as travel tech startups, was severe with some fading out of the market and others pivoting their business,” said Oranuch Lerdsuwankij, chief executive and co-founder of Techsauce.
On average, 10% of startups are successful and the rest falter.
According to Ms Oranuch, the number of startup funding deals dropped last year but the amount of investment in each deal secured was high as investors sharpened their focus on startups in the growth stage – from Series A to B funding.
Startups in pre-series A or seed funding rounds struggled to gain financial support, she said.
By the end of this year, Thailand’s first unicorn startup is likely to emerge, which could potentially inspire others to follow in its footstep, she said without identifying the startup.
A unicorn is a startup company valued at more than $1 billion.
In the first five months of this year, 13 investment deals worth $24.2 million have been clinched with local startups, most of which are associated with fintech, education technology, healthcare and energy and electric vehicles.
“Startups need to scale in overseas markets so as to draw more investors,” said Ms Oranuch. “Regulators need to amend laws, including the waivering of capital gains tax, something we have urged for many years.”
The waivering of capital gains tax is imperative for investors who want to put money in growth-stage startups, she said. Without this, local startups may migrate to be registered in Singapore to capitalise on a better tax incentive.
Startups which could potentially rise in the region are those associated with food and agriculture, health technology as well as education.
According to Ms Oranuch, Techsauce provides a directory that presents local startups and investors as well as the funding level each startup has received at https://startupdirectory.techsauce.co.
It also introduced a new platform — https://techsauce.co/connext — which gathers new talent, learning resources as well as opportunities for matching with corporates for jobs.
There are 250,000 graduates each year in the country and it is hard for them to find a job.
According to Techsauce, its survey shows that 37% of 115 respondents who were students and fresh graduates said they lacked skills and 34% said they had no idea what they are good at or what they like.
Some 17% said they were worried about salaries and another 12% were worried they might end up with jobs they dislike.