Thailand is an emerging start-up hub in Asia. Its ecosystem is the fourth largest in Southeast Asia in terms of venture capital investments after Singapore, Indonesia and Viet Nam and the sixth largest in terms of number of start-ups. Targeted policies have been supporting start-ups since 2016, and the local start-up scene has been grabbing attention due to its potential and strategic location in a growing region. This chapter presents an overview of the start-up scene in Thailand; it highlights its distinctive features, including the emergence of food-tech, the policies to enable start-up development across the whole national territory and the need to update the regulatory framework to ensure start-up expansion in digital global markets.
Start‑up Asia
Chasing the Innovation Frontier
Abstract
Thailand is an emerging start-up hub in Southeast Asia. The country is the fourth largest start-up hub in the region in terms of venture capital investments (2020-22) after Singapore, Indonesia and Viet Nam and the sixth largest in terms of number of start-ups [authors’ calculations based on Crunchbase (2023[1])]. Thailand’s start-up scene is developing within a dynamic region. Southeast Asia is increasingly considered a new frontier for start-ups, following their rapid development in older Asian hubs such as the People’s Republic of China (hereafter “China”) and India (ASEAN and UNCTAD, 2022[2]; Deloitte, 2023[3]; Asian Development Bank, 2022[4]).
Thailand’s current development strategy emphasises innovation and digitalisation, and start-ups are a key component. Following the country’s successful transformation into an export-oriented manufacturer, Thailand is aiming at upgrading its economic structure and raising value addition, while spreading the gains regionally (OECD, 2021[5]; OECD, 2021[6]). In line with regional and global trends, the country has developed targeted policies to support start-ups since 2016, spearheaded by the National Innovation Agency (NIA), aiming to accelerate the ecosystem’s development and raise its visibility.
This chapter presents an overview of Thailand’s current start-up ecosystem; it highlights its distinctive features, including the emergence of food-tech, and analyses the country’s policies to support start-up development. It concludes by identifying key policy recommendations for Thailand to continue unleashing the potential of start-ups for development.
Thailand’s start-up ecosystem has grown fast since the early 2010s. The beginning of the start-up scene can be traced back to the 1990s when the first efforts to stimulate venture capital took place, including through the set-up of the Thai Venture Capital Association in 1994. Some software and ICT SMEs begun appearing back in the 2000s and the first few large websites were created around the global dot-com boom, such as Sanook in 1998, a portal site similar to Yahoo!, and Kapook in 2003, a news and lifestyle content firm. However, it was in the 2010s that awareness about start-ups started gathering speed, as founders with experience in Silicon Valley started to set up their businesses in Thailand. AIS, a large telecommunications firm in Thailand, hosted a Startup Weekend in 2011 that is considered a watershed moment for the ecosystem (Vandenberg, Hampel-Milagrosa and Helble, 2020[7]; Asian Development Bank, 2022[4]; Chairatana, Kanjanamekanant and Limwathanagura, 2023[8]). Within ten years, venture capital (VC) investments went from near zero before 2011, to accounting for over 0.1% of GDP during 2021-23 (Figure 4.1). Thailand’s start-up scene grew together with other hubs in the region, such as Indonesia, Viet Nam, Malaysia and the Philippines, as investor interest grew for new Asian markets beyond the larger hubs of China, India and Singapore. It has emerged as a resilient market: while VC investments halved from 2021 to 2022 across all of Southeast Asia due to interest rate hikes and geopolitical instability, in Thailand investments rose by 76%.
The country’s start-up scene is relatively small by regional standards. Thailand is the fourth largest start-up hub in Southeast Asia by venture capital flows (Figure 4.1). It accounts for around 4% of all VC in the region (2021-23), behind Singapore (58%), Indonesia (25%) and Viet Nam (6%). Thailand accounts for 5% of all start-ups, the sixth largest behind Singapore (47%), Indonesia (19%), Viet Nam (9%) and Philippines (8%). Similar to other emerging hubs in the region, it is characterised by a relatively low density of start-ups, reaching 1.5 start-ups per 100 000 people, on par with Indonesia (1.4), but below the OECD average of around 40.
Note: Panels B and D: based on active start-ups founded between 2014-2023. Panels C and D: Asia and OECD values are regional averages. Panel D: the Asian average is computed on countries with over 50 active start-ups and excludes Singapore.
Source: Authors’ elaboration based on Crunchbase (2024[9]), database, https://www.crunchbase.com and IMF (2024[10]), World Economic Outlook, https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD.
Thailand’s ecosystem has three main features: (1) investments and start-ups concentrate in transport and logistics, fintech and e-commerce; (2) corporate investors play a big role; (3) Bangkok is where the majority of start-ups in the country are concentrated.
Investments and start-ups concentrate in transport services, fintech and e-commerce
Venture capital in Thailand is highly concentrated in transportation and logistics (38%), fintech (27%) and e-commerce (22%). This specialisation is similar to other emerging hubs in the region, and indicative of investors backing start-ups that are adapting business models to the local market. It is also a pattern driven by the large investments going into Thailand’s three unicorns, which stand out in a relatively small market: Flash Express, established in 2017, is specialised in courier and other delivery services with a business that has rapidly spread to Southeast Asia; Wongnai, established originally in 2010 as a restaurant review app and then launched as LINE MAN Wongnai after merging with LINE MAN in 2020, and becoming an on-demand service delivery platform (taxi hailing, food delivery, with also e-wallet Rabbit LINE Pay); Ascend Money, established in 2013 is a fintech start-up, and a spin-off of telecoms group TrueMoney, which provides e-commerce and e-payment solutions through its e-wallet TrueMoney.
Note: All active start-ups founded between January 2014 and December 2023. Asia average includes countries with over 50 start-ups and over 10 annual VC deals.
Source: Authors’ elaboration based on Crunchbase (2024[9]), database, https://www.crunchbase.com.
The top categories for start-ups in Thailand are IT and services (20%), followed by fintech (17%) and then business services (13%). Thai start-ups seem to have a similar pattern of specialisation to the Asian average, but Thailand has a relatively higher concentration of fintech firms compared to the regional average (17% vs 14%) (Figure 4.2). The fintech industry has been growing in recent years, driven by the emergence of new payments firms, various lending platforms, including crowdfunding platforms and financial services comparison websites. The introduction of PromptPay, a public digital payment infrastructure by the Bank of Thailand (BoT), together with the introduction of a dedicated regulatory sandbox by BoT for fintech firms has also supported the sector’s rise. Fintech is also characterised by a large presence of established firms, looking to diversify into new models. This is the case of True Group with AscendMoney, and Rabbit LINE that was begun as a partnership between Thai-based private transport conglomerate and Korean messaging app LINE. In addition, Thailand’s share of AI and data analytics start-ups is 6%, just above the Asian average, even though investments in the sector are low at 1%, and below the regional average of 5%. This highlights a growing sophistication among Thai start-ups, that has yet to be matched by financing. Some of the country’s AI start-ups have successfully raised financing including Manatal – an AI recruitment software set up in 2018 – and DRVR, a firm that offers data analytics from IoT functions in vehicle fleets, set up in 2014.
Corporate investors play a big role in financing start-ups
The venture capital scene in Thailand is characterised by a high concentration of corporate investors, compared to other countries in Asia. Corporate firms are among the most active investors in the country, making up 37% of all investors (Figure 4.3). They invest either by making direct equity investments or by setting up dedicated corporate venture capital (CVC) firms and incubators or accelerators. Among the most active Thai corporate investors are the three largest mobile phone operators in Thailand that started developing venture arms in the beginning of the 2010s: Dtac (with Dtac accelerator set up in 2012), InTouch Holdings (the parent of AIS and Thaicom that set up InVent as a professional CVC arm in 2012), and True Group (with True Incube as an incubator and accelerator set up in 2013). These were followed by initiatives from other industries, for instance banking, such as KBank (with Beacon Venture Capital set up in 2016) and Bank of Ayudhya (Krungsri Finnovate set up in 2017), and petrochemical groups, such as PTT and SCG Chemicals (Sprint Accelerator set up in 2017). In the case of Thailand, the majority of these investors are private conglomerates with some notable exception such as PTT. This stands in contrast to, for instance, Indonesia where state-owned firms are more present in the economy overall, and as corporate ventures. Overall, local and foreign corporate investors participated in about 46% of all venture capital deals in Thailand with an investor listed during 2020-22, compared to for instance 30% in Indonesia and 20% in China (Figure 4.3). While these investments have the potential to boost the innovation potential of the Thai corporate sector and multiply synergies with new technologies and business models, they remain geared towards start-ups that have a proven product. For example, out of the deals in which corporates participated, only 37% were at the seed stage during 2020-22, compared to 66% for all investors. Such differences in funding behaviour are observed in other regional hubs – for instance in Singapore where 46% of deals with CVC participation were seed, compared to 71% for all investors – with the exception of China were seed deals are relatively low overall.
Among professional venture funds active in the country, the majority (86%) are headquartered abroad, notably in Singapore (23%), which has emerged as a regional financial power hub, and the United States (20%) [authors’ elaboration based on TechSauce (2023[11])]. This is in line with wider regional trends. Thailand, together with Viet Nam and Indonesia are destinations of funds that have a regional outlook, and Singapore is often an important regional node for routing investments, building on the strength of regional trade and financial ties. According to data by ASEAN and UNCTAD (2022[2]), about 22% of global investment into VC funds that focus on the ASEAN region was intra-regional, with Singapore accounting for 60%. One of the most active foreign investors in Thailand is US-based 500Global that has also launched a local fund (500 tuktuks) and SOSV, Japan-based CyberAgent and Singapore-based Jungle Venture. However, the dominance of foreign funds also indicates that further growth is possible on the domestic venture capital scene.
Source: Authors’ elaboration based on Crunchbase (2024[9]), database, https://www.crunchbase.com and Techsauce (2023[11]), database, https://startupdirectory.techsauce.co/investor.
Bangkok concentrates start-ups and investments in the country
In line with global trends, start-ups in Thailand tend to cluster in the capital city, with 85% of start-ups setting up their business in Bangkok (Figure 4.4). Bangkok accounts for about 16.4% of Thailand’s population and 48% of GDP and hosts most national large firms [authors’ elaboration based on National Statistics Office (2022[12])]. However, the share of start-ups in Bangkok is higher than the share of start-ups in other capital cities in Asia, including Jakarta (71% of Indonesia’s start-ups), Manila (72% of start-ups in the Philippines) and Kuala Lumpur (78% of Malaysia’s start-ups).
Note: Only active start-ups that were founded between 2014 and 2023 are included. DEL: Delhi, BLR: Bengaluru, MUM: Mumbai, BJS: Beijing, SGH: Shanghai, SZH: Shenzhen, TYO: Tokyo, SEL: Seoul, JKT: Jakarta, LHE: Lahore, KCH: Karachi, ISD: Islamabad, KUL: Kuala Lumpur, HCM: Ho Chi Minh, HAN: Hanoi, DHK, Dhaka, MNL: Manila, BKK: Bangkok, CMB: Colombo, KAT: Kathmandu, PNH: Phnom Penh.
Source: Authors’ elaboration based on Crunchbase (2024[9]), database, https://www.crunchbase.com.
Bangkok’s start-up ecosystem has thrived with its easy access to technology and innovation infrastructure. The city is home to most of Thailand’s top universities and other academic institutions: out of 37 government and academic institutions ranked by SCIMago in Thailand, the majority were within Bangkok and its surrounding metropolitan area (57%) [authors’ elaboration based on SCImago (SCImago, 2023[13])]. Some of these are taking an active role in fostering start-up ecosystems. For instance, Chulalongkorn University, ranked as the top university in Thailand, has developed a new system for incubating spin-offs from research and student innovations that includes not only guidance and support for intellectual property (IP), but also financing at the seed stage through holding companies (Box 4.1). Other universities with similar holding companies include Chiang Mai University and Khon Kaen University. Bangkok is also close to some of Thailand’s most important scientific infrastructure, including the Thailand Science Park, established in 2002 by the Ministry of Higher Education, Science, Research and Innovation, and home to several national centres for research. These centres include genetic engineering and biotechnology (BIOTEC), on metal and material technology (MTEC), electronics and computer technology (NECTEC), and nanotechnology (NANOTEC). These institutions have served as incubators for start-up projects, and have fed start-ups in the city with a high-quality talent pool.
Chulalongkorn University is Thailand’s oldest higher education institutions, established in 1917 in Bangkok. One of the University’s main missions, apart from providing quality education, is to contribute to building Thailand’s knowledge base, through research and innovation.
Chulalongkorn University has tried to support technological development and diffusion by encouraging the commercialisation of university research, through the creation of spin-offs. To this end it established the following interrelated institutions:
The Chulalongkorn University Innovation Hub (CU I-Hub), established in 2016, which aims at nurturing talents and developing transformative ideas among students and staff through research, education, and competitions.
CU Enterprise Foundation, a holding company established in 2018 that invests in deep technology start-ups and spin-off companies that have been incubated in the CU I-Hub. In March 2023, CU Enterprise was supporting research by 194 start-up teams from CU I-hub. The University has also encouraged faculties to set up similar holding companies, such as CU Dent Enterprise (by the Dentistry department) and CU Vet Enterprise (by the Veterinary department).
These institutions pioneered a new way of incubating spin-offs in Thailand, which creates a bridge between academia and industry through providing pre-seed and seed financing for promising start-ups.
One of the University’s successful start-ups is Baiya Phytopharm, born out of research from the faculty of pharmacy. The company specialises in plant-based protein recombinant production through the BaiyaPharming platform. It built the first plant-based cGMP facility for humans in Asia and has a COVID-19 vaccine currently in clinical trial. It has been financed by the CU Enterprise (seed) and has received a financial grant from the government of Thailand for COVID-19 vaccine R&D project.
Source: Kaywalee Chatdarong, Vice President for Strategic Planning, Innovation and Global, Engagement, Chulalongkorn University, presentation in High Level Roundtable on Start-up Asia – Chasing the innovation frontier: the case of Thailand, held on 4 April 2023.
While still fledgling, some new hubs are emerging outside the capital, such as Chiang Mai and Phuket, each accounting for 3% of start-ups in the country. Chiang Mai benefits from local universities, University of Chiang Mai, which has its own Science Technology Park and business incubator, and Maejo University, also with an incubator. In addition, there is the Northern Science Park (NSP), one of the country’s biggest regional parks (OECD, 2021[6]). Phuket does not have as much of a developed research system, although it is home to Phuket Rajabhat University, and benefits from local campuses of other larger Thai universities, such as Prince of Songka University. Both Phuket and Chiang Mai share commonalities with other tech hubs in the region, such as Bali, that have seen their start-ups grow. Indeed, so-called digital nomads pick these places for their quality of living, and lower cost compared to Bangkok (Pattarawan, 2022[14]).
Thailand has transformed rapidly since the 1970s, integrating into the proliferating global value chains (GVCs) that have sprung up in Asia. About 72% of Thailand’s exports were manufactures during 2020-22, with 22% of all exports concentrated in electronics and 12% in automotive [authors’ elaboration based on UNCTAD (2023[15])]. This structural transformation has been based largely on export-oriented foreign investments – FDI as a share of GDP (stock) was 36% of GDP, the second highest share in Southeast Asia after Singapore (365%) [authors’ elaboration based on UNCTAD (2023[15])]. This shift has also been fuelled by the emergence of large private local firms that leveraged the domestic market in heavy industries and services, or engaged in exports together with foreign investors (OECD, 2021[5]; OECD/ERIA, 2018[16]). Now Thailand is aiming to tap into innovation as an accelerator of growth and to widen its entrepreneurial base by supporting research and development (R&D) among local firms, the pursuit of higher technology activities, the diffusion of digitalisation technologies, and the expansion of the start-up ecosystem.
Boosting innovation and digitalisation is now at the heart of Thailand’s development strategy (Box 4.2). Thailand has put in place the National Strategy 2018-2037, elaborating for the first time a long-term vision of becoming “a developed country with security, prosperity and sustainability”. The strategy aims to enhance Thailand’s capacity to navigate changes, boost innovation and upgrade the economic structure and raise incomes, while spreading the gains regionally. Since 2018, Thailand has introduced an Industry 4.0 strategy to transform the country’s economic structure, and sought to develop new growth hubs, as the Eastern Economic Corridor (EEC) which aims to attract investments in Rayong, Chonburi and Chachoengsao provinces, near Bangkok. Such priorities are also echoed in medium-term strategies, such as Thailand’s 13th five-year National Economic and Social Development Plan (2023-2027), which lists the shift to an innovation-driven economy as the first among its five goals.
Thailand’s objectives and institutions for innovation policymaking have evolved since the early 1990s (Figure 4.5). At the time, the country’s main development objective was to increase export-oriented manufacturing and attract foreign direct investments (FDI), with little conscious effort to promote innovation. The Asian financial crisis in 1997 marked a watershed. It highlighted the fragility of development models that rely on pockets of development, and spurred a shift promoting innovation and competitiveness as a source of growth in the early 2000s. The 9th National Economic and Social Development Plan (2002-2006) began the process of transforming the country into a “knowledge-based” economy, and this was accompanied by the establishment of dedicated institutions and infrastructure for STI, such as the National Innovation Agency in 2003.
In 2010, the focus shifted to a more integrated innovation policymaking, boosting innovation in industry and harnessing new technologies. This decade saw the introduction of the Thailand 4.0 campaign, which aims to promote ten so called “S-curve” sectors. They include next generation automotive, smart electronics, medical and wellness tourism, agriculture and biotechnology, and food for the future, robotics, aviation and logistics, biofuels and biochemicals, medical hubs and digital technologies, the Eastern Economic Corridor (EEC) which sought to increase foreign direct investment (FDI) into the country, and Start-up Thailand. More recently, Thailand is looking to intensify the focus on start-ups, and looks to regionalise its innovation system, further harnessing regional internationalisation linkages. Looking towards the future, in line with Thailand’s 13th five-year National Economic and Social Development Plan (2023-2027), Thailand is setting its sights on increasing the breadth and density of its innovation system, and becoming one of the top 30 countries worldwide for innovation by 2030.
Note: STI: Science, Technology, and Innovation; NSTDA: National Science and Technology Development Agency (Thailand); NIA: National Innovation Agency (Thailand); EEC: Eastern Economic Corridor (Thailand); RDI: Research, development, and innovation; NIS: National innovation system.
Source: Authors’ elaboration based on official information provided by the National Innovation Agency in the framework of Start-up Asia – Chasing the innovation frontier: the case of Thailand.
Since 2016, fostering start-ups has become a key component of Thailand’s innovation policy. Before that year, support to start-ups was mostly incorporated into overall support for SMEs, such as within the frameworks of the various SME master plans through the Office of SMEs Promotion (OSMEP), or within the framework of the country’s STI policies and master plans emphasising innovative SMEs. Various new institutions have been created or reformed recently with the aim of developing support programmes specifically for start-ups and strengthening their delivery:
The Start-up Committee was created in 2016, bringing together different government agencies to boost awareness for start-ups, infrastructure and incubation services and improve policy and regulatory environments.
The National Innovation Agency (NIA), established in 2003 under the supervision of the Ministry of Higher Education, Science, Research and Innovation (MHESI) (formerly the Ministry of Science and Technology), was designated in 2016 as the main implementation agency for promoting start-ups and turning Thailand into an international start-up hub. It complements the work of other agencies under the umbrella of the same Ministry, such as the National Science and Technology Development Agency (NSTDA), which provides funding for R&D. NIA also operates parks and incubators and Thailand Science Research and Innovation (TSRI), which allocates research funding and draws up Thailand’s STI policies.
Start-up Thailand, a promotion platform, was also created in 2016, co-ordinated by NIA, which organises annual events bringing together a vast array of public and private start-up stakeholders from Thailand and abroad. The platform organised a large event the same year (also called Start-up Thailand) which is considered a milestone in bringing awareness to start-ups in Thailand and bringing stakeholders together.
The Digital Economy Promotion Agency (DEPA) was created under the newly established Ministry of Digital Economy and Society (MDES) in 2017 as a legal entity under the Digital Development for Economy and Society Act BE 2560. DEPA aims to develop Thailand’s digital industry and promote digitalisation in firms, including by fostering digital start-ups.
Several different ministries and agencies have become involved in start-up promotion (Figure 4.6). Broad directions for the country’s development are given by bodies such as the National Economic and Social Development Council (NESDC), under the Prime Minister’s Office, while more detailed and issue-specific plans are formulated by different ministries, including MHESI, the Ministry of Digital Economy and Society (MDES) and the Ministry of Economic Affairs (in particular with the Department of Industrial Promotion or DIPROM). Implementation agencies are tasked with executing policies. While some overlaps do exist, each agency comes with its own unique focus. For example, NIA’s support tools are mostly aimed towards smart SMEs and start-ups. They emphasise innovative business models, products and ideas that can contribute to the country’s innovation and industrial development. DEPA works mostly with start-ups active in the digital sector, while the Office of SMEs Promotion (OSMEP), set up in 2000 under the Office of the Prime Minister to foster SME growth, focuses on smart and high-value ventures together with SMEs. The Start-up Committee aims to align and co-ordinate efforts across agencies. No single definition exists for start-ups in Thailand. As a result, agencies often define start-ups for their own purposes in the process of designing support tools (Table 4.1).
Meanwhile, various private sector associations help shape policy in Thailand and often work together with the public sector. The Thai Start-up Trade Association was established in 2014 by a group of tech entrepreneurs and now consists of over 100 members, with a vision to turn Thailand into “a nation of makers”. It aims to build connections between start-ups investors and the public sector, disseminate relevant information and mentor start-ups to help them grow. The Thai Venture Capital Association (TVCA) was established in 1994 with members consisting of Thai and foreign venture capital, private equity firms and related businesses. TVCA aims to work together with the government to advise on practices and policies to promote venture capital in the country. New associations have been created more recently to advance collaboration in more advanced sectors, such as the Climate Tech Club, which aims to build a cleantech value chain. It was set up in 2023 by government actors, such as NIA, NSTDA, the Thailand Greenhouse Gas Management Organization (TGO), venture capital firms such as Beacon VC and Nexus, and corporates including Wastech Exponential, PAC Energy, Builk One Group and cWallet.
Note: DIPROM (Department of Industrial Promotion), BoB (Bureau of the Budget), PSDC (Office of the Public Sector Development Commission), CGD (Comptroller General’s Department), SEPO (State Enterprise Policy Office), TCG (Thai Credit Guarantee Corporation), SBG (Government Saving Bank), TED (Technology and Innovation-based Enterprise Development).
Source: Authors’ elaboration based on official sources.
Note: NIA: National Innovation Agency; DEPA: Digital Economy Promotion Agency. SME: Small and medium enterprises.
Source: Authors’ elaboration based on official sources.
Thailand has been reforming regulatory frameworks to encourage start-up development in three main areas:
Cutting red tape and facilitating immigration of talent: The so-called Guillotine Plan was initiated by the government in 2017, aiming to eliminate unnecessary laws, rules and regulations and improving the ease of doing business. As a result, business days to set up a company have been cut from 29 in 2016 to 6 since 2017 (World Bank, 2023[17]). In addition, like OECD countries that are putting in place frameworks to attract talent (OECD/Bertelsmann Stiftung, 2019[18]), Thailand is making it easier for high-skilled workers to settle in Thailand. The Thailand Board of Investment (BOI) grants “Smart Visas” for qualified professionals and their families meaning they are exempt from seeking a work permit for up to four years. These exemptions are granted for a set of 13 advanced industries, including automotive, medical industries and food-tech, among others, either as talents, investors, executives or start-uppers. Individuals who apply as start-uppers need to have founded a start-up in Thailand that is tech-oriented or innovative or to have attended incubation, acceleration or similar programmes by related agencies, such as the NIA, DEPA and the BOI, or to plan a start-up in one of the targeted industries (BOI, 2020[19]).
Facilitating market financing for start-ups: In 2019, crowdfunding rules were clarified (Securities and Exchange Commission (SEC) Tor Jor. 21/2562), allowing Thai SMEs and start-ups to raise capital from pools of retail investors, while peer-to-peer lending rules were also clarified the same year (BoT Notification 4/2562), setting standards for lenders and borrowers. In 2020, the SEC eliminated the need for approval for new shares issued for Employee Stock Option Programmes (ESOPs), and allowed the use of convertible loans by SMEs, which gives further flexibility for fundraising for start-ups (SEC Tor.Jor. 17/2563). Finally, the LiVE Exchange (LiVEx) was launched in 2022 by the Stock Exchange of Thailand, aimed at smaller companies and start-ups that are looking to fundraise before moving on to larger exchanges such as the Market for Alternative Investments (MAI), an exchange launched in 1998 for SMEs (Polkuamdee, 2022[20]). Firms that can list on LiVEx are SMEs (medium or larger ones as defined by OSMEP) and start-ups in which a VC or PE firm is co-investing.
Encouraging new business models through regulatory sandboxes. Sandboxes have been set up to allow businesses to test their models and technologies, such as by the National Broadcasting and Telecommunications Commission for the adoption of 5G technologies in Thailand or the sandbox created by the Bank of Thailand in 2019 for fintech services.
Moreover, the government has been introducing various tax incentives that are relevant for start-ups, either by reducing tax burdens on investors or by making investments in certain sectors and technologies more attractive. For instance, Royal Decree No.597 granted tax exemptions on dividends and on capital gains to investors in targeted industries (The Capital Law Office, 2022[21]). Start-ups can benefit from the generous tax incentive schemes by the Board of Investment (BOI), although these are normally targeted at larger firms. In line with other policy packages found in the region (e.g. in Malaysia and Singapore) Thailand’s BOI issues income tax incentives of 3-10 years depending on the project. It also grants exemptions from duties for machinery and raw materials that are used in export-oriented production. Lastly, it provides non-tax incentives such as easier permits to own land, facilitation of foreign skilled workers and the possibility to remit currency. Targeted activities (bio and medical industries, advanced manufacturing, basic and supporting industries, digital and creative industries) and technologies (bio, nano, advanced materials and digital) enjoy longer duration incentives. In addition, BOI has introduced incentives for certain regions, such as the three provinces that make up the Eastern Economic Corridor, Special Economic Zones, Southern Border Provinces and low-income provinces and various zones, estates and parks (BOI, 2021[22]). Newly introduced incentives allow exemptions for investments in R&D, training, and local supplier development. However, the minimum capital requirement for a project to be considered for a tax incentive is BHT 1 million baht (approx. USD 31 000), which might be dissuasive for start-ups (BOI, 2021[22]).
Since 2016, Thailand has introduced various tools to support start-ups, with an increasingly articulated and varied policy mix by:
Providing financing: Thailand’s first financing instruments were mostly in the form of grants for ideation, pre-seed and seed/early-stage projects, often with an explicit innovation or targeted sectoral focus. The Youth Startup fund, supported by MHESI, provides small grants of TBH 100 000 to TBH 1 500 000 (approx. USD 3 000-45 000) for developing an idea and reaching the pre-seed stage. Start-ups may also benefit from various research-oriented grant schemes, such as the Open Innovation Scheme by the NIA. This scheme provides a matching grant of up to 75% of project value [up to TBH 1.5 million (USD 45 000)] for the development of innovative products in specified sectors (e.g. bioeconomy, circular economy and the sharing economy, among others). More recently, Thailand has been introducing new forms of financing in an effort to further stimulate local ventures and scale them up and in order to do more with scarce resources. There are three main new tools:
DEPA’s Digital Start-up Fund, which introduced in 2020 convertible grants for start-ups with a size of TBH 1 million-5 million per award (USD 32 000 to USD 156 000). These grants are meant to mature into equity at a later stage,
DEPA’s direct equity investments in start-ups through the dVenture programme in 2021. Through dVenture DEPA collaborates with partner investors (e.g. Disrupt Technology Venture, KrungsriFinnovate, InVent and Innospace) in the form of matching funds to invest in start-ups (Techsauce, 2021[23]);
NIA’s credit programme for start-ups that seek to expand their business, which provides a 100% interest subsidy for up to TBH 5 million (approx. USD 156 000), provided the focus of the business is on specific sectors (e.g. the bioeconomy, manufacturing and the circular economy, and the sharing economy, among others).
These new instruments are in line with global trends to diversify public policy tools for start-ups. For instance, convertible grants have been recently introduced by NESTA in the United Kingdom, mainly for impact investments (NESTA, 2018[24]), whereas interest rate subsidies for start-ups have been introduced in countries where there is a tradition of using this tool for other development policy objectives (e.g. in Japan and Korea). Meanwhile, public venture capital funds have been around for decades, but have been proliferating in recent years as more and more countries look to kick-start investments in start-ups (Cumming, Johan and Zhang, 2022[25]).
Providing services to start-ups: Like older start-up hubs, Thailand’s first publicly supported incubators focused more on university spin-offs, and other tech-oriented ventures. Thailand has been building incubators for start-ups in universities since 2004 (through the Office of the Higher Education Commission), however these have tended to be small in scale. Indeed, other than incubators in top universities, few of them are considered successful (UNCTAD, 2015[26]). The NSTDA has also set up a Business Incubation Centre in Thailand Science Park, which supports entrepreneurs looking to develop innovation- and tech-intensive programmes through mentorship, networking and access to expertise and infrastructure. More recently, incubators and accelerators have been set up by public agencies that cater to beneficiaries with potentially high social and environmental impact, such as Space F by NIA in co-operation with Thai Union, which focuses on food-tech, and DEPA’s Startup Institute which focuses on digital programmes, such as smart cities. There is increasing public support on expanding access for start-ups to the tools they need for business growth – a key challenge faced by entrepreneurs in Thailand (NIA, 2022[27]). Business development training programmes for example, have long been offered by OSMEP, and new programmes that are more targeted to the needs of start-ups have been rolled out. For example, the Mind Credit by NIA offers a voucher for professional business consultancies to improve start-uppers’ skills in issues such as business financing and pitching. DIPROM has also launched Angel Fund, an initiative co-managed with the private sector that provides financial and mentorship support to selected early stage start-ups. In addition, DIPROM’s Startup Connect programme provides connections to investors, government agencies and international networks to firms in the growth stage.
Stimulating demand through procurement: Another recent innovation introduced in Thailand is the use of government procurement to increase demand for products and services by Thai start-ups. With a programme that was launched in 2019 to facilitate start-ups’ participation in the procurement process, the NIA provides funding to start-ups for testing solutions that respond to problems identified by government agencies. If their technology proves successful, then start-ups can win a contract with the relevant agency. A committee consisting of the Bureau of Budget, the Office of the Public Sector Development Commission, the Comptroller General’s Department, the Office of the Auditor General, the State Enterprise Policy Office, the Revenue Department, the Ministry of Finance and the NIA develops the Terms of Reference (ToR). Based on the ToRs, an MoU is signed between agencies and start-ups. For example, QueQ is a Thai start-up that developed a queueing application now used in public hospitals and agencies. According to information provided by NIA, in 2019-2020, 20 start-ups received contracts worth some THB 42.8 million (approx. USD 1.2 million). Other countries in the region are also beginning to explore how they can use the procurement as a tool to boost start-ups. For instance, India adapted in 2017 its procurement rules to include start-ups in its Government e-Marketplace, and the European Union amended its public procurement rules in 2014 to encourage procedures that include smaller innovative firms.
Note: * Private sector initiative. NSTDA (National Science and Technology Development Agency), NIA (National Innovation Agency), DEPA (Digital Economy Promotion Agency), MHESI (Ministry of Higher Education, Science, Research and Innovation), OSMEP (Office of SMEs Promotion), TCG (Thai Credit Guarantee Corporation), MOST (Ministry of Science and Technology), MOF (Ministry of Finance), BOI (Board of Investment).
Source: Authors’ elaboration based on official sources.
The current policy aims to support start-up development beyond the capital city. The government is investing in scientific infrastructure across the different regions in the country and it is setting up regional outreach offices. One of the main thrusts of Thailand’s innovation policy has been the development of science parks in regions, each with specialised research institutes and a package of services and incentives offered to tenants, including incubation spaces. For example, the NSTDA manages the Thailand Science Park (TSP) (in Bangkok, 2003) and three regional ones: the Northern Science Park located at Chiang Mai University, the Northeastern Science Park located at Khon Kaen University and the Southern Science Park at Prince of Songkla University, which houses various incubation services. The Eastern Science and Technology (EAST) Park has also been recently set up in Burapha University as part of the EEC programme. More recently, and with the focus of policy initiatives on start-ups, NIA, in particular, has set up three so-called “Global Startup Hub Thailand” offices. These offices aim to provide local start-ups with basic business information, support foreign entrepreneurs to secure Smart Visas, organise local networking events with start-ups and investor groups, and provide in-depth consulting services on various legal, investment, IP and market access issues. These are based in Bangkok (in True Digital Park, focusing on deep-tech, smart electronics, IoT, med-tech, and e-commerce among others); in Chiang Mai (in collaboration with the Suan Dok Medical Innovation District, a local medical cluster, and is focused on agri/food tech, health and medical tech); and in the Eastern Economic Corridor (based in EAST park, and focused on deep-tech, agro/food tech and logistics).
Food-tech is gaining ground in Asia, following the global trends, and is re-shaping the way food is produced, traded and consumed. Digital, bio-, nano- and other emerging technologies are making it possible to grow and make food differently, reduce waste, increase efficiency and introduce innovations in packaging, among others. Further downstream, innovations in food-delivery and restaurant bookings have also changed consumption patterns. Globally, VC investments in food-tech firms reached 7.3% during 2021-23, and 31% of this was absorbed in Asia, higher than the region’s overall share of VC at 23%.
Thailand has emerged as a vibrant food-tech hub in Asia. About 9% of Thailand’s firms were engaged in food-tech, the third largest share in Asia after Myanmar and Indonesia, and higher than the OECD average (7%) (Figure 4.8). Food-tech start-ups in Thailand are engaged in a variety of activities, from developing AI solutions for agriculture and food production (e.g. Algaeba which offers precision aquaculture solutions), to developing biotech and nanotech solutions (e.g. Nabsolute which produces nonpackaging for the delivery of food and pharmaceutical substances), to various platforms for food delivery and food commerce (e.g. Eatigo and Freshket).
Food-tech start-ups as a share of total country start-ups, Asian countries and OECD average, 2023
Note: All countries in Asia (excluding Western Asia) with over 20 start-ups. Based on all active start-ups established between 2014 and 2023.
Source: Authors’ elaboration based on Crunchbase (2024[9]), database, https://www.crunchbase.com.
Thailand is building on several strengths when it comes to food-tech:
It has a large agro-food industry, being one of the largest net exporters of agro-food in Asia (Figure 4.9), including the poultry industry, where Thailand was the world’s sixth largest exporter in 2022 (3.2% of world total), aquaculture (e.g. shrimp, tuna), and fruits, vegetables and crops (e.g. sugar, rice, durian) [authors’ calculations based on ITC (2023[28])]. Moreover, some of the large corporate agro-food firms of Thailand, such as Thai Union Group (a seafood conglomerate), are active investors in food-tech start-ups.
The image and reputation of Thai cuisine is positive and widely recognisable around the world. For instance, Pew Research shows that Thai restaurants made up 11% of Asian restaurants in the United States in 2023, whereas only 2% of Asian Americans were Thai (Pew Research Center, 2023[29]).
The country has launched several private and public sector initiatives to stimulate food-tech. For example, Space F is a food-tech incubator established in 2019 with the co-operation of two private-sector conglomerates – the Thai Union Group, and Thai Beverage –, the NIA, Mahidol University and Deloitte, in Bangkok. Space F offers an incubation and acceleration programme that offers 1:1 mentorship, workspaces with lab equipment and networking opportunities, as well as opportunities to meet with investors and to grow their businesses through Thai Union channels. NIA also created in 2019 AGrowth, an agtech accelerator in co-operation with the Research & Innovation Sustainability Center (RISC) (established in 2018 by real estate development firm Magnolia Quality Development Corporation), Siam Kubota Corporation (a joint venture since 2010 between Japan-based Kubota Corporation and Thai-based Siam Cement Group, specialising in agricultural machinery), and run by Nest VC, a private-sector investment firm. Both Space F and AGrowth are based in Bangkok and are open to start-ups globally, not only those that are based in Thailand. Other projects include the Northern Thailand Food Valley, set up in 2014 as a collaboration between the Ministry of Agriculture and Cooperatives, the Department of Industrial Work, the Ministry of Science and Technology, the Thai Chamber of Commerce and the Federation of Thai Industries with the aim of fostering start-ups by expanding co-operation among stakeholders, in different regions, and providing information and mentoring and branding (OECD, 2021[6]).
Net exports (exports-imports) of agro-food, Asian countries, 2023
Source: Authors’ elaboration based on UNCTAD (2023[15]).
Going forward, it will be important for Thailand to strengthen the science and technological base for food-tech. Efforts to scale up R&D in the industry will be important to supply food-tech with the talent and demand it needs to flourish. Thailand already has some initiatives, such as Food Innopolis, a supporting organisation managed by the National Science and Technology Development Agency (NSTDA). Food Innopolis is based in Thailand Science Park in Bangkok and was established in 2016 as part of the Super Cluster policy of Thailand. It aims to be a platform to connect start-uppers and other industry entrepreneurs with R&D facilities and provide mentoring. However, boosting investment levels across the board will be critical. As a share of GDP, R&D has tripled in the space of a decade from around 0.4% of GDP in 2011 to 1.1% in 2019, but this remains below the OECD average (2.72%) [authors’ elaboration based on UNESCO, (2023[30]) and OECD stat, (2023[31])]. On the one hand, the private sector in Thailand accounts for a large share of expenditures (68%), showing that businesses are committed to innovation (National Statistics Office of Thailand, 2023[32]). On the other hand, these need to be accompanied by public sector investments that can unlock upstream, applied research capabilities that are often considered too risky and difficult to capture fully by the private sector.
There is also space to scale up regional food-tech initiatives and exploit the expertise that exists in regional innovation hubs. Among the top 5 universities in Thailand for food science (which are also ranked among the world’s top 500), only one is based in Bangkok (SCImago, 2023[13]). These institutions already play an outsized role as local hubs for innovation and are vital in connecting with the industry. For instance, Chiang Mai University is the locus of a vibrant regional innovation ecosystem, that brings together local researchers and the private sector, but maintains close links with central level government, funding agencies and quality standard agencies. These efforts are also complemented by the Northern Science Park, founded in 2012 and headquartered there, which works in collaboration with 13 other universities across the region. When it comes to food, the University has close links with industry. For instance, the Food Innovation and Packaging Centre (FIN) works closely with the private sector to co-develop solutions for new products and packaging (Figure 4.10). Scaling up the efforts of existing regional outreach offices by NIA and other organisations and connecting start-uppers to these regional innovation ecosystems could meet the twin goals of increasing start-up creation in regions and strengthening scientific resources for food-tech start-uppers.
Note: DIPROM: Department of Industrial Promotion; DOAE: Department of Agriculture; FIN: Food Innovation and Packaging Centre; NIA: National Innovation Agency; NSTDA: National Science and Technology Development Agency); SODU: Strategic Objective Driving Unit; STEP: Science and Technology Park, Chiang Mai University.
Source: Yuthana Phimolsiripol, Director of Food Innovation and Packaging Centre, Chiang Mai University, Thailand, presentation in the Annual High-level Meeting of the G20 Platform on SDGs Localisation and Intermediary Cities: towards a sustainable urban future for all.
Thailand has stepped up support for start-ups since 2016, accompanied by the creation and reform of new and existing institutions in order to improve delivery. Meanwhile, the ecosystem has become denser, with more risk capital and ecosystem service providers emerging in recent years. To consolidate progress and enable start-ups to flourish in Thailand, the country could consider:
Updating the policy mix and increasing resources in supporting start-ups in line with innovation ambitions.
Despite efforts to raise the sophistication of the start-up scene in Thailand, the amount of VC investments that flow to emerging tech such as AI and health and biotechnology remain small (about 0%-1% compared to 4%-6% in Asia on average), while there continue to exist few links between start-ups and high-tech manufacturing network in Thailand and the wider region. Going forward, and building on an already active start-up scene, Thailand should step up resources to catalyse its innovation capabilities through start-ups.
On the one hand, it will be important to ensure that start-ups have enough access to financing, particularly for activities that are more complex and innovative, and where private sector VC night be less willing to invest. The support offered by Thailand to start-ups is up to USD 42 000 (grant by NIA), which is comparable to grant levels offered for instance by France (the French Tech Grant by Bpifrance has offered grants of EUR 30 000 since 2014) and Singapore (in 2017 SG Founder by StartupSG started offering SGP 50 000 grants for new start-ups – approx. USD 37 000), but a) the scale of the overall programmes is much smaller in Thailand. Indeed, the thematic grant of NIA supports around 20 start-ups annually, whereas on average over 600 start-ups are supported by Bpifrace’s French Tech Grant; b) it falls short of programmes that help start-ups avoid the so-called “valley of death”, i.e. when start-ups are working in areas that are relatively more risky and harder to generate revenue such as deep-tech (e.g. artificial intelligence, biotech etc.). For instance, the United States Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programmes fund between USD 50 000-250 000 for feasibility studies and up to USD 750 000 for continued R&D efforts. Similarly, the SG Tech fund, by Enterprise Singapore funds between approx. USD 185 000 to 370 000 for proof of concept and proof of value projects in innovation-intensive start-up projects respectively. Thailand could consider steadily increasing the support for start-ups with a long-run goal of reaching the levels of support seen in more advanced economies.
On the other hand, developing so-called deep-tech start-ups takes more than dedicated and targeted start-up programmes. Start-ups do not flourish in a vacuum – they need rich interactions with other innovation stakeholders, such as academia and research bodies and large firms, including with a global outlook. Thailand will need to continue mobilising resources for innovation to enable this – currently the country invests 1.2% of GDP in R&D, higher than some countries in the region such as Malaysia (0.95%), but less than half the rate of the OECD average (2.73%) [based on (UNESCO, 2023[30]) and (OECD stat, 2023[31])]. Investing in building up the innovation talent and infrastructure needed will be critical in supporting a more mature start-up ecosystem in the long term (World Bank Group, 2025[33]).
Beyond scaling-up resources, Thailand could gain from regular assessment and evaluation of existing programmes to understand the impact of policies, especially considering the introduction of new schemes such as convertible loans, interest rate subsidies targeted to start-ups and the government procurement mechanism (see also (OECD, 2023[34]). Advancing on the measurement agenda will also be important for monitoring, evaluating and adapting policies. Finally, it will be important to ensure that co-ordinating mechanisms are effective, meeting regularly and monitoring progress on reaching their stated objectives (ERIA/OECD, 2024[35]).
The United States Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs
The United States Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs support technological innovation and encourage domestic small businesses, including start-ups, to engage in federal research and development (R&D) with the potential for commercialisation. The STTR specifically focuses on partnerships between small companies and non-profit research institutes. These initiatives are structured in three phases. Phase I establishes technical merit and feasibility and SBIR/STTR awards are generally between USD 50 000-250 000 for 6 months (SBIR) or 1 year (STTR). Phase II awards are generally USD 750 000 for 2 years and companies continue the R&D efforts started in Phase I. In Phase III, the objective is for the small business to pursue commercialisation objectives resulting from the Phase I and II R&D activities. The SBIR/STTR programmes do not fund this last phase, although it may entail follow-on R&D or production contracts for products, processes, or services intended for use by the US government. Participant businesses need to have fewer than 500 employees. For STTR, which fosters co-operation between industry and academia, the business needs to carry out at least 40% of joint R&D.
The scale of the programme is significant. Each year, funding allocation involves federal agencies earmarking 3.2% of extramural R&D budgets exceeding USD 100 million for SBIR (approx. USD 3.2 billion minimum spend each year) and 0.45% for STTR (approx. USD 450 million minimum spend each year). Eleven federal agencies participate in SBIR, with five also participating in STTR. Each agency administers its own programme, setting R&D topics, accepting proposals, and making competitive awards.
Among the success stories of SBIR is Qualcomm, a US-based mobile technology provider that accounts for an estimated 32% of the world’s smartphone application processor chips. In its early stages the firm received several SBIR grants, amounting to USD 15 million between 1987 and 1990. These grants allowed the firm to develop what was seen as a very high-risk technology, while signalling to private investors the firm’s technological potential. The programme often provides the crucial first investment needed to develop an idea or a product and begin the process of bringing it to the market.
Singapore: raising the technological level of the start-up ecosystem
Singapore introduced Enterprise Singapore (EnterpriseSG) in 2018, an agency under the Ministry of Trade and Industry, with the aim of bolstering the technological and innovation capabilities of the local start-up and SME ecosystem. Startup SG, launched in 2017, became one of the key initiatives of EnterpriseSG, aiming to introduce instruments that are targeted to the needs of local start-uppers including mentorship, funding and global connections. Startup SG introduced new financing instruments (grants and equity tools) to encourage the development of start-ups that are engaged in sophisticated, high-tech activities by placing specific conditionalities regarding the technological level and areas of activities of start-ups. Given the risky nature of such ventures, these instruments are also typically released in tranches and are conditional upon meeting various milestones. More specifically:
Startup SG Tech offers a grant of SGD 250 000 for proof-of-concept projects, and up to SGD 500 000 for proof-of-value ones, to start-ups that are developing breakthrough innovations, and building proprietary technology in a range of advanced industries, such as advanced manufacturing and robotics, biotech, cleantech, ICT, precision engineering and agri-food tech. Start-ups must have registered in Singapore during the past 10 years and carry out their core R&D activities in the country. To ensure effective utilisation of funds, start-ups must also make increases in paid-up capital (by 10% to 20%) and the funds are released in tranches depending on business or technology milestones. In addition, EnterpriseSG or its selected nominee has a share subscription right of 50% of the awarded grant amount (up to 49% of the shareholding of the company) and this takes effect when a qualifying equity financing round takes place.
Startup SG Equity, implemented by SEEDS Capital, SGinnovate and EDBI, is an instrument that co-invests with third party investors in Singapore-based technology start-ups that have intellectual property and global market potential (including holding a patent or engaged in ongoing research collaboration). It focuses on deep-tech start-ups in advanced manufacturing pharma, biotech and medtech and agri-food tech. While for general technologies there is a cap at SGD 2 million, for deep tech ones it goes up to SGD 8 million.
Source: Authors’ elaboration based on Startup SG (2023), website, https://www.startupsg.gov.sg/ and OECD (2016[36]), Start-up Latin America 2016: Building an Innovative Future, Development Centre Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264265660-en.
Growing the start-up ecosystem beyond Bangkok. Not only does Bangkok concentrate start-ups, but also spaces that support their growth, such as incubators and accelerators. Despite government programmes to extend incubation activities in universities across the country, the large incubators and accelerators are predominantly based in Bangkok – around 83% of them – including virtually all the start-up accelerators (Figure 4.11). While Thailand is already making efforts to promote start-ups in other regions, it is important to strengthen initiatives as the existing pattern risks slowing the momentum of new hubs. While relatively more pronounced in Thailand, the issue of high concentration of start-ups among capital cities is common globally and countries have started to take action to foster regional start-up hubs (OECD, 2019[37]; OECD, 2016[36]). Some countries are integrating regional perspectives in their national policymaking for start-ups with targeted tools and conditions. For instance, the Start-up Chile programme introduced the Go-Regional incentive in 2015 that provided an additional grant to those start-ups that set up base outside the capital (OECD, 2016[36]). In others, local governments take more of a lead in promoting their own local ecosystems, depending also on the fiscal and policy space they have (Box 4.4). In Thailand, there is a strong tradition of centralisation in policymaking, but local governments can play a more active role, for instance by orienting public infrastructure and service support to encourage local start-ups and supporting national policymaking through feedback on implementation. This would require a higher awareness of start-up policies locally and investing in local government capacity-building to ensure effectiveness (UNCTAD, 2015[26])
Note: Coverage excludes small university incubators.
Source: Authors’ elaboration based on Crunchbase (2024[9]), database, https://www.crunchbase.com, XYZ Lab (2023[38]), “Start-up accelerators & incubators”, https://www.xyzlab.com/startup-accelerators-incubators, GSMA (2021[39]), Indo-Pacific Tech Hubs (database), https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2021/11/GSMA-Ecosystem-Accelerator-Indo-Pacific-Tech-Hubs-List.xlsx and additional research.
Start-up Chile: a national programme that adapted to foster regional start-ups (Chile)
Chile introduced the Start-Up Chile programme in 2010, which put start-up policy at the heart of the country’s production development strategy. Start-up Chile provided non-repayable seed capital to new entrepreneurs, access to basic infrastructure for initial operations, and simpler visa procedures for foreign beneficiaries, among other tools. Within a couple of years of its launch, Chile started to redefine the criteria for supporting start-ups to better meet the needs of entrepreneurs and better align support with its national development objectives.
One of the key challenges observed was that start-ups in regions outside Santiago’s metropolitan area were faced with a wider gap in terms of access to funding and services. Furthermore, because there was not a region-based approach, there was a disconnect between production development priorities in strategic industries (often located outside Santiago’s metropolitan area) and pro-start-up measures, which, at the user level, focus mainly on the capital. As a result, Start-Up Chile introduced reforms to improve regional inclusion. It opened regional offices in Valparaíso and Concepción, and in 2015 it began to offer the Go-Regional incentive, which consisted of a CLP 5 million (USD 6 800) non-repayable contribution – in addition to the CLP 20 million (USD 27 500) under the Start-Up Chile Seed programme – for start-ups to set up base in the regions (Go-Regional incentive).
La French Tech: an accreditation programme to raise visibility of cities (France)
“La French Tech” initiative was launched in 2013 to foster start-up creation in France. It aims to create a “banner” to catalyse actions for start-ups in France. It is co-ordinated by the French Tech Mission, under the Ministry of the Economy, Finance and Industrial and Digital Sovereignty with the co-operation of many different public organisations. La French Tech provides various start-up assistance programmes, including grants and acceleration funds, as well as tailor-made support on regulatory and financial issues for start-ups that have shown promise in becoming world leaders.
La French Tech is also a brand, which aims to raise visibility of start-up hubs in France and abroad. It was first given to nine cities in 2014 and this has subsequently expanded. The accreditation has been awarded to 17 capitals, 31 communities in France and 67 international communities, as well as to various private sector associations. These local initiatives aim to bring together local stakeholders to drive local actions and deploy the national programmes at the local level.
Since its creation, La French Tech has supported 538 start-ups across Brittany, a region in north-western France, employing 14 000 people. The Western Brittany French Tech initiative has four main objectives: centralising the digital ecosystem, raising awareness of entrepreneurship, accelerating start-ups and internationalising and digitalising the local economy. La French Tech prioritises businesses that offer solutions to industrial and technological manufacturing problems and developing new business models. One such start-up which has received funding support is Eolink, a start-up based in Brest which draws on the local marine industry by manufacturing floating wind turbines.
Local initiatives to promote start-up development: the example of Biscay Startup Bay (Spain)
Bizkaia province in Spain has a strong manufacturing heritage based on shipbuilding and steel, as well as port and logistic activities based in the port of Bilbao, its capital city. Now the city is promoting start-ups with the aim of rejuvenating the local economy, fostering innovation and expanding in new economic activities. It launched the Biscay Startup Bay strategy in 2019 with the aim of solidifying and advancing the local entrepreneurial ecosystem.
The strategy includes: a) the provision of infrastructure for start-uppers and other stakeholders through the refurbishment of the B Accelerator Tower, a building outfitted for accommodating corporates, start-ups and other stakeholders working towards innovation; b) a platform for interacting with local corporate actors and ecosystem builders such as incubators and accelerators; c) a comprehensive package of financial and service support through public programmes including the provision of seed capital with a combination of capital and loans (from up to EUR 450 000 to EUR 1 million depending on stage of development), as well as crowdfunding and microcredit platforms (Bizkaia Seed), incubation/acceleration and mentoring and promotion activities (Bizkaia Beaz); talent attraction services (Bizkaia Talent); grants for business R&D development through the Hazitek programme, which is funded by the EU Regional Development Fund with a budget of EUR 90 million for 3 years (2023-25). As Bizkaia has autonomy in the collection and management of local taxes, it also offers a package of tax incentives (tax reductions, deduction and special tax rates) for fund managers and investors, MSMEs, investments in R&D and capital development and talent. Finally, the programme pursues global connections with other start-up ecosystems through public-private partnerships in Boston, Helnsinki, Tel Aviv and Latin America.
Source: Authors’ elaboration based on Startup SG (2023[40]), website, https://www.startupsg.gov.sg/; OECD (2016[36]), Start-up Latin America 2016: Building an Innovative Future, Development Centre Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264265660-en; Bizkaia Government (2020[41]), “Place your expectations at the top”, https://insurancechallenges.com/wp-content/uploads/2020/09/2020-09-17-Biscay-Startup-Bay-eng.pdf; Venture Beat (2018[42]), “France’s NUMA launches IoT accelerator in smart city Angers”, https://venturebeat.com/entrepreneur/frances-numa-launches-iot-accelerator-in-smart-city-angers/; Startup Genome (2023[43]), The Global Startup Ecosystem Report 2023, https://startupgenome.com/report/gser2023; French Government (2023[44]), La French Tech, l’écosystème des start-up françaises, https://lafrenchtech.gouv.fr/; Le Télégramme (2023[45]), “Brest, nouvelle capitale bretonne de la French Tech ?”, https://www.letelegramme.fr/economie/brest-nouvelle-capitale-bretonne-de-la-french-tech-6383398.php
Investing in talent, including for women. Thailand needs to invest more in the pipeline of talent to support its growing start-up ecosystem (ERIA/OECD, 2024[35]). The country has a shortage of skilled workers, with about 15.6% of its over-25 population currently holding at least a bachelor’s degree, which while higher than some regional peers such as Malaysia (12%) is roughly half the rate in more advanced economies, such as Korea (29%) (Figure 4.12). At higher levels of education, which is often needed for work in high-tech industries, such as AI, the gap is even higher: some 0.05% of women and 0.12% of men in Thailand hold a doctorate, compared to 1.8% and 2.4% in the United States, for instance. It is worth noting, that while at Bachelor level, women are overrepresented in Thailand, this gap reverses at the PhD level.
There is also scope to increase female entrepreneurship. Start-ups with at least one woman owner make up only 19% of the total in Thailand. Among the largest start-up hubs in the world, the highest percentage of woman-owned start-ups are found in the United States and Australia, at around 23%, highlighting that this is a global issue, and one that needs wider social and economic transformation policies. Nevertheless, mainstreaming gender in the policy mix could help open new opportunities. Some countries are earmarking financing for women entrepreneurs, such as in India, where 10% of the country’s Fund of Funds for Startups Scheme was earmarked for women-led start-ups (PIB Delhi, 2023[46]), and in Chile, where at least 50% of start-ups supported through Start-up Chile’s seed programme “Build” are owned by women. Others are focusing on raising awareness and stimulating the private sector to take the lead, such as the Parity Pact of La French Tech, launched in May 2022, that sets commitments for stakeholders in the French Tech initiatives (including start-ups) to take steps to improve gender equality in company governance, management, recruitment, representation and parenthood responsibilities.
Note: No data for doctorate level education available for India and Japan. Data for India are for 2022, for Cambodia and the United States for 2021, for Bangladesh, Indonesia and Japan for 2020, for Malaysia, Myanmar, Philippines, Thailand and Viet Nam for 2019.
Source: Authors’ elaboration based on World Bank (2023[17]), World Development Indicators, https://datatopics.worldbank.org/world-development-indicators
Continuing regulatory reforms to improve the business environment for start-ups and enable their global outreach. Despite progress in regulatory reforms, start-ups in Thailand continue to face high barriers to business. In a survey of start-ups carried out by NIA, regulatory barriers were identified as one of the key obstacles start-uppers face, together with difficulties to attract talent, raising finance, and expanding to global markets (NIA, 2022[27]). For example, while programmes such as the Smart Visa aim to position Thailand as a global start-up hub by easing requirements on start-uppers, it might be worthwhile to streamline the overall framework for foreign talent instead of creating patchworks of regulation (OECD, 2021[5]). For instance, without a Smart Visa, a start-up would need to demonstrate registered capital of between TBH 2 million (if registered in Thailand) and TBH 3 million (if registered abroad) (between USD 63 000-94 000), which is often prohibitive for young firms (NIA, 2022[27]). Moreover, while ESOPS are now easier, further clarifying regulations around their implementation and making them attractive in terms of ease and taxation rules, could also help attract more talent with the promise of equity. For instance, several OECD countries are working towards more friendly rules for share schemes which reduce the tax burden on employees for owning and selling shares. This occurs, for example, in France (2020), the Netherlands (2021), Finland (2020) and Australia (2022) (EY Global, 2021[47]; Deloitte, 2020[48]; TechCrunch, 2020[49]).
It will also be important to strengthen intellectual property (IP) frameworks in Thailand to allow start-ups to exploit their IP assets and compete globally. Thailand has advanced in updating frameworks for IP protection and enforcement in recent year, but the availability of counterfeited goods and unlicensed computer software remains a problem, weakening incentives to invest in new products and process, and affecting the country’s image and reputation, an important asset for competitiveness, particularly in the digital economy. Stepping up implementation of current policies for IP, including Thailand’s Intellectual Property Roadmap in 2016, will be needed (OECD, 2021[5]). International partnerships can be important to support this process, and Thailand is already working to make the most of these. For example, the European Union Intellectual Property Office (EUIPO) and Thailand’s Department of Intellectual Property are working together closely to share best practices and technologies in the context of the ARISE+ (Enhanced ASEAN Regional Support) IPR project. The ARISE+ IPR project is funded by the European Union and implemented by EUIPO. It is a five-year EUR 5.5 million programme aiming to support upgrade IP systems in ASEAN, in line with the region’s IPR Plan 2016-2025 with various training and other capacity-building activities.
Thailand exemplifies the impressive trajectory start-ups and innovation have taken in Asia, but also the challenges that are emerging in the region, as quick gains have already been reaped and financing opportunities are becoming scarcer. Within ten years, venture capital (VC) investments in Thailand went from near zero before 2011, to accounting for over 0.1% of venture capital during 2020-21. Despite fast growth, Thailand’s start-ups remain mostly oriented towards adapting global consumer-oriented business models, such as in e-commerce and fintech, rather than high technology. They are also mostly based in Bangkok with small pockets of start-ups in other regions, such as Chiang Mai where food-tech is thriving. Thailand has relied on an active private sector that invests in start-ups, with one of the highest rates of corporate venture capital investments in the region, and an articulated public policy mix that demonstrates a commitment to supporting start-ups, and to creating a supportive business environment. However, for Thailand to match its innovation aspirations the country will need to switch up gears, mobilise adequate resources, and better target them to enable start-uppers to invest in learning and bring their innovations to market. It is also important to make the ecosystem more inclusive, amplifying tools and investments for supporting the emergence of start-ups beyond Bangkok, and to bring more women in.
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