These days, Local Alike is one of the more established start-ups in Thailand . But it was nearly impossible to raise capital when Pai Somsak Booknam started the company, he says. While several social enterprises, or startups focused on solving societal problems, are starting to gain traction in Thailand today, they were nearly unheard of 10 years ago. And investors certainly weren’t interested. Booknam said he pitched to more than 15 investors and each one turned him down.
“After many fails, I decided, ‘Okay, no more talking with VCs,’” he said.
Instead, Booknam took advantage of entrepreneurship competitions that were just starting to take off in the Asian Pacific. Local Alike won two competitions right off the back: BanPu Champion for Change, a contest for social enterprises funded by Asian energy company Banpu Public Company Limited, and a best startup award from AIS the Startup, a global accelerator.
Booknam continued entering competitions and the grants he earned served as enough seed money to get him started. But he said the process was even more valuable because the competitions offered advice on how to run a successful company. Competitions are a way to help startups learn how to grow, says Nae Nae Chairatchaneeboon, a business development associate at Thailand tech incubator Disrupt Technology Ventures.
Chairatchaneeboon helps with Disrupt’s annual Hackathon, where tech startups can compete for prizes. This year focused on developing edtech for schools and social impact startups. She said she received over 200 applications, despite the pandemic.
“A lot of people in Thailand actually are passionate about resolving social issues,” Chairatchaneeboon said. “And some may not have the tech aspect to it yet, but we do see the potential of it growing in the future and scaling into the international market.”
COVID-19 has presented challenges for many of these budding entrepreneurs. A report from the Global Entrepreneurship Monitor said that between 30% and 50% of pre-crisis Thai startups are likely to perish.
But Pun Jaruthassanakul sees a different picture. “It’s been not as bad as you would expect initially,” said Jaruthassanakul, a senior investment manager at 500 Tuktuks, a $10 million East Asian venture capital microfund. “For a lot of the companies, it’s actually been a net positive.”
The fund has invested in 70 companies in the Asian Pacific region, is part of the 500 Startups fund family. The Silicon Valley venture capital network has funded over 2,000 companies globally.
Out of 500 TukTuks’ portfolio of 70 companies, Jaruthassanakul said about 10 have been heavily affected by the coronavirus. A greater concern lies in whether new startups will form during this time, as recent college graduates face economic hardships and investors become potentially more selective.
Jaruthassanakul said funding for companies at the seed stage dried up at the beginning of the pandemic, but has started to bounce back. 500 TukTuks made 20 investments in 2019 and has only made one in 2020. But just in the last month, as Thailand’s lockdown came to an end, the VC began talks to make four to six new investments.
500 TukTuks is one of the very few VCs in Thailand to come from investment hubs like Silicon Valley, Jaruthassanaku said. Most investors are Thai themselves. Thailand’s neighbors Vietnam, Indonesia and Singapore get more attention from international investors for a number of reasons. Fewer people in Thailand speak English and fewer pursue an education in technology. There are also fewer Thai expats spread across the world, Cheah says.
Ultimately, one IPO, or one major merger and acquisition from a Thai startup could help the whole ecosystem, Jaruthassanakul said.
“We haven’t had a culture similar to what you have in Silicon Valley, where you can entice people with stock options and equity in the company, because nobody here has gotten rich by selling their stake in a startup yet,” Jaruthassanakul said. “But if we have a big m&a or an exit, then we can recycle the money, recycle the talent, and then people have something to look up to, something much more concrete.”
There are a few startups on the horizon who could make this happen, Jaruthassanakul says. One is Wongnai, an app that started similar to Yelp, but has since merged with Lineman, the delivery vertical of Tokyo-based software company Line.
Booknam says he’d like to go public one day. For the first time, he said the company is talking with more than 10 investors, all offering one to three million dollars in capital. The money would really help Local Alike deepen their services in local communities, allowing for even more tour options and an expansion of the new Local Alot marketplace. But Booknam says he only wants to expand as long as the Thai villages he works with can prosper with him.
“If we grow too much, but the community doesn’t grow with us, it’s a negative impact rather than a positive impact,” he said. “My vision is that local communities, every single one has to be able to stand up on their own.”
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