Bangkok is not only the hottest capital weather-wise, but also emerging as one of the hottest cities in the world for startups. There are many pros and cons when considering launching your startup in Thailand. In this article we will review those and give our view as a four year old Bangkok based startup.
Government Regulations & EcoSystem
The Thai government has launched a program called Thailand 4.0. This is a series of initiatives aimed at transforming Thailand from an industrial economy to a service based economy. Thai legal system is a an odd mix of Code Napoleon and Code Rama 5. In order to be able to operate a business in Thailand you will need to establish a legal entity.
A high growth startup will need to open a BOI promoted company. This article describes this process. Countries like Singapore, HK and Malaysia do not have equivalents of the BOI as they are not needed. DRVR for has a Hong Kong Top co and operates local entities. You will need to consider whether to establish your top co in HK or Singapore.
The BOI offers a number of benefits in certain targeted areas such as fin-tech, logistic-tech, e-payment and food-tech. PeoplePerHour’s Startup City Index has elevated Bangkok to the seventh best city to create your startup in 2018.
Overall the grants and incentives for startups in Thailand are very limited. Most of them require the startup to be 51% Thai owned. Read our article on Thai Startup Grants below.
The incentives from the angle of a startup company are compelling with the new regulations.
The increasing interest around foreign angel investors towards Thai Startups is shown on the chart , this still remains tiny and access to seed capital is a major problem in Thailand. VC funding has increased, however a detailed analysis shows that the lions share of this went to the 4 startups.
Expect to be spending a lot of time travelling to Singapore and Hong Kong to seek investors. Foreign Angel Investors are mostly from Singapore, Hong Kong or Indonesia where rich families are highly active in investing significant founds to the potential companies.
Local sources are often coming from one of the co-founders of the startups and their contributions vary. Thai independent Angel Investors usually offer their help at the seed stage. Their contributions are rarely higher than US$ 50,000. Personal connection to Thai investors is a vital part of a good relationship, foreign entrepreneurs are unlikely to have these connections.
Corporate Venture Capital has exploded in Thailand in the last two years. All CVC’s in Thailand are quite new to the industry and thus, they have limited experience and understanding to early stage startup companies. CVC are mainly interested in strategic investments, the experience of DRVR is that there is little to no deal flow and the CVCs are primarily a conduit to invest money in regular VC and for their staff to have field trips to Silicon Valley. Best avoided as this will sap your energy and time.
The majority of CVC investments are coming from Telcos, Banks and Real Estate Corporations.
Real estate corporates need new technologies in order to differentiate their company from others by innovating. The industry owns 12% of the overall funds of CVC’s.
Bank corporates like Beacon, Digital Ventures and Krungsri have the biggest pie with 42%. They are usually second wave investors thriving to disrupt themselves by developing banking and related services.
All the Thai Telcos operate their own Accelerator/Incubator programs such as AIS The Startup, True In Cube and DTAC Accelerate are continuously looking for the possibility of developing products and services and they have more deals than all the industries together but only secure 13%. The Telco Accelerator programs have been a critical part of the Thai startup ecosystem for almost a decade.
Multiple corporation in IT, O&G, and Petrochemical has shown interest in disrupting companies by investing and they own 33% of the total invested funds.
DRVR’s CEO David has written a number of articles on this topic. He addresses the pros and cons of setting up in Thailand in this article.
Let’s investigate the obstacles and disadvantages you might face:
- Intellectual property is non-existent in Thailand and thus, all Thai startups have a parent company in Singapore or Hong Kong.
- The government is striving to make the life of foreign startups as difficult as they can: unclear paperwork processes, complex investment structure, Thai employment requirement, complex legislation and legal regime
- If you are not ethnic Thai you will face very limited local funding possibilities in Thailand.
- It is very difficult to deal with the customs. Expect a long processing time and high cost. Avoid importing things if possible.
- There are exhausting audit and taxation requirements which will raise the cost of business.
- You may have a hard time finding data scientists, back-end developers and may need to source from overseas — don’t forget to maintain ratios of Thais to foreign workers (4–1 or 1–1 for BOI)
Living and Location
One of the biggest benefits of Bangkok is it’s relatively low cost. This allows you to bootstrap your operations for much longer than say the Valley or Singapore.
What is the cost of living in Bangkok? (Studio condo rent is between 7k to 18 k THB in Central Bangkok).
Modern Infrastructure and Conveniences. Bangkok is a super modern city with all of the infrastructure needed to run your awesome new startup. Bangkok has super fast internet. In DRVR’s office we have a 200mb connection and pay 800 THB per month. We joke amongst ourselves when our Australian guys join the call as the call quality drops! Thank you NBN!
The BTS, ARL and MRT offer access to most parts of the city and help you avoid the horrendous traffic! Use the Skytrain and the Motorcycles to get around!
Bangkok’s street food. Thai food is famous worldwide for its spice, flavour, and unique taste. It’s obviously at its best in Thailand.
In addition to the ubiquitous local food, Bangkok has an amazing international food scene.
Southeast Asia is one of the world’s fastest-growing markets — and one of the least well known.
As you can see on the picture most of the Asian metropolises are one flight away from Bangkok which will significantly ease your life when traveling. Within 3 hours of Bangkok there is an accessible market of 3 Billion people!
Read about the importance of the ASEAN economy in the article above.
Offices & Co-Working Spaces
Office space and Co-working is super cheap in Thailand. Drop us a line info@drvr.co if you want some free passes for WeWork or other awesome spots. You want to be meeting like-minded people, making friends, opening new doors of opportunity and out amongst the vibe.
Luckily, Bangkok is a global leader in amazing co-working spaces.
1. Hubba — Multiple Locations
Hubba was one of, if not the, first official coworking space in Bangkok.
2. The Hive — Thonglor
Located in the heart of Thonglor, The Hive at Piman 49 is a 5 minute drive from the Thonglor BTS station and boasts a host of amenities.
3. The Great Room — Chidlom
So much more than merely a place to get a job done, The Great Room will enrich the way you work and socialise. Directly connected to Chidlom BTS in Central Bangkok, The Great Room occupies 30,000 sqft over 2 floors in a brand new, light filled building.
3. WeWork — Sathorn
WeWork’s workspaces in Bangkok are at the center of a rapidly expanding international hub for arts, entertainment, and innovation. WeWork is opening its new building at Asia Centre, Sathorn District very soon:
From front-desk service to fresh fruit water, utilities & security to employee events, our spaces include all-inclusive amenities that are cost-effective — and meaningful.
Now, here are some of the difficulties you might face while living in Bangkok:
- You will never be a Thai. While there is a great expat community that will welcome you with open arms, you will never be Thai. You’ll never be fully accepted into Thai culture, and will always be and feel like an outsider looking in.
- The Government can be unstable in Thailand. From protests, to coups, to constantly changing rules, Thailand is a confusing place to live the past few years.
- English language can be a problem with around 16% of the Thai population speaking English to a reasonable standard.
- Thailand is a confusing place to live in the past few years. Destitute children will pull on your hand, limbless beggars will plea for coins, and women holding infants will cry for food. The police are paid pennies, and take every opportunity they get to squeeze more funding out of foreigners, who are seen throughout Thailand as wealthy (regardless of their actual economic status).
Successful Startups Founded in Thailand
Cookly
It was funded in 2015 as a platform for booking cooking classes. They are operating in 20 countries and are still seed funding stage.
“Challenging to get started, but very positive outlook and potential!”
Helpster
Founded in 2016. The company is an on-demand staffing solution and a recruitment marketplace.
“ Market fit is very important localisation is key to success.”
Octotrip
Octotrip was funded in 2013. They provide travel booking to businesses from flights, hotels all the way to the airport transfers.
“Don’t think you are in Thailand but think as if you are in SEA”
MASII
Masii was funded in 2015 and is in Series A funding stage. It has 36 employees. It is a online Brokerage platform for financial products comparison.
“A local partner is important when you have to deal with regulations, especially business like FinTech”
DRVR
DRVR was funded in 2015. It currently has 20 employees. DRVR transforms the way you manage your deliveries, service calls and organise your vehicles.
“We are turning Asia’s vehicle fleets into the smartest and most cost-efficient in the world.”
Summary
Overall Bangkok is a good place too bootstrap a start, however these are some serious issues which mean that it’s not going to be an ideal choice for everyone. Startups focused on Travel Tech and ones interested in developing markets would not find much better bases than Bangkok. If you are bootstrapping your startup to launch back in Europe then it’s also a good option.
One the debit side of the ledger the heavy costs of administration weigh heavily on startups. Difficulty in hiring and keeping staff pose another critical issue. Most significantly fundraising is extremely difficult in Thailand with few funding sources available. Expect to spend a lot of time travelling to HK and Singapore.
Overall a good but not great place to base your startup.
Check out some of the awesome references we looked at:
- https://www.linkedin.com/pulse/6-most-exciting-startup-cities-asia-graham-brown/
- https://aecnewstoday.com/2017/is-bangkok-really-asias-startup-hub-navigating-the-thailand-boi-process/#axzz5QCWLyvvU
- http://blog.peopleperhour.com/blogroll/peopleperhour-reveals-their-startup-city-index/
- https://www.business-sweden.se/contentassets/9e62c807f3cc45be90c371547d1c126d/thailand-as-seas-emerging-startup-hub-2018.pdf
- https://www.uih.co.th/en/knowledge/thailand-4.0
- https://www.thehumanasia.com/en/david-henderson-fleet-analytics-for-asia-drvr-thailand/
- https://www.thehumanasia.com/en/david-henderson-fleet-analytics-for-asia-drvr-thailand/
- https://www.quora.com/What-is-the-living-cost-in-Bangkok-Thailand-I-got-a-job-as-a-senior-software-engineer-60000-baht-pm-I-am-from-India-Is-it-sufficient-to-survive-and-also-save-money-Most-importantly-how-are-future-career-opportunities
- http://joyandjourney.com/living-in-bangkok-pros-and-cons/
