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Thailand’s Local Startups Struggling as Funding Dries Up

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Most startups struggling to survive
Thailand’s Startups representatives gather at an online conference late on Thursday to share their views about business during the coronavirus pandemic. Up to 80% of the local startups are struggling financially with revenue drying up in the wake of the coronavirus outbreak.
The Thailand Tech Startup Association (TTSA), which wants the government and all related parties to help.

“The sudden impact from the pandemic means local startups face a difficult time, with loss of customers directly affecting their revenue,” TTSA president Panachit Kittipanya-ngam told the Bangkok Post.

“We estimate that income at up to 80% of local startups has fallen to zero. Some travel tech startups have started laying off their staff.”

Mr Panachit’s remarks were relayed at a live press conference, in the online presence of representatives from over 60 startups and from capital ventures, late on Thursday.

Local Startups want to survive

He said local startups want to survive and to be an integral part of the country’s digital economy, by providing products and services that could speed up digitization in both the public and private sectors. Support for local startups would mean valuable data would be kept in the country, he said.

Local startups play a part in generating income for the country and hiring a skilled workforce, estimated to number around 3,000. These skilled workers received an average 50,000 baht in monthly salary, which is a high fixed cost for startups, he said.

Mr Panachit said the TTSA had submitted an open letter to policymakers, corporate bodies and the public, seeking their assistance.

Firstly, the government should lend a hand by purchasing products or services provided by startups. Similar support could also come from corporates’, he said.

The nature of startups

Secondly, credit criteria should be fine-tuned to suit the nature of startups. Many of them cannot make profit for the first 6-7 years. The criteria must take into account their growth potential, he said. A small local startup needed an estimated 3-5 million baht in loans.

Finally, the public can play a part in supporting startups by purchasing locally made tech products and services.

Patai Padungtin, first and former president of the TTSA, described local startups as the “new economic warriors” who have been driving Thailand 4.0 over the past six years.

They were trying their best to adjust their business to survive amid the global pandemic crisis, he said.

Currently, many local startups had enough cash for only 3-4 months. If they could not get access to fresh  capital in that time at least half of them could falter and disappear, he said.

Support from local customers, and financial assistance, would enable them to fight on, he said.

In the post Covid-19 world, Mr Panachit said, digitisation would accelerate and that local startups could provide solutions and tools for that.

“If local startups cannot survive, there will be only foreign platforms left, as they still have a strong cash flow. The market will then be dominated by foreign players who will have the power to control prices of products and services,” said Mr Panachit.

Another former head of the TTSA, Vachara Aemavat, said some countries, such as South Korea, imposed a digital boundary for foreign operators, to groom domestic startups.