Venture Capital in Thailand

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Venture capital is funding provided to emerging businesses and startup companies that have extreme potential for growth but lack the financial capital needed to make their business visions into a reality.  Venture capital firms, like Effi Enterprises take up the important task of helping those companies find the funding they need to take their businesses public in ten years or less.  Many investments can be risky endeavors, but can yield extreme profit.  Along with providing the finances needed, venture capital firms like Effi Enterprises, also guide the companies with managerial assistance and business advice to make sure the company becomes a success.  Thailand’s venture capital market has potential for growth, but has limited exposure to the use of venture capital funding.  Even though its venture capital industry is not fully developed at the present moment, it is a place venture capital firms should continue to monitor for opportunity in the future. 

History of the Venture Capital Market in Thailand

Official venture capital investing began in Thailand through the US Aid programme in 1988 when it formed an investment company, Business Venture Promotion, which was owned and funded by multiple local banks.  Following this, many foreign venture capital companies such as CitiCapital and Prudential were founded in the 1990s when Thailand’s GDP was increasing at double digit rates each year.  Eventually they got together to form the Thai Venture Capital Association to support the new venture capital industry in Thailand.  Since 2000, the Thai government has began to understand the importance of the venture capital industry to Thailand’s growth and has supported several venture capital funds and given tax incentives to promote venture capital investment in Thailand.

Current State of the Venture Capital Market in Thailand

Thailand’s economy is experiencing growth in the past few years even after being affected by past world economic crisis and natural disasters like extreme flooding.  With interest rates almost at 3% and economic growth in 2013 predicted to be 4.6%, Thailand’s growth seems to be inevitable and economic conditions look optimal.  Thailand has strong agricultural, tourism, and manufacturing and services sectors.  In the manufacturing sector, its labor costs are relatively low compared to other Southeastern Asian countries.  Its tourism sector is impressively successful with 19 million tourists in 2011, levels that have doubled from ten years earlier.  Also, Thailand has become a key production base for global automotive and electronics firms from Japan and the United States.  Although the venture capital market is not fully developed in Thailand and operating to its full potential, there is room for growth and there is a strong foundation for a profitable future.  The formal venture capital fund activity has remained limited, but there have been several notable “strategic investments” by large corporations in technology and media business or corporate venture capital.

Future of the Venture Capital Industry in Thailand

Despite not having a fully developed and growing venture capital industry in Thailand, economic conditions look optimal in Thailand and the foundation for future venture capital growth is there.  The government has increased international competitiveness through expanding foreign investment, exports, and tourism. Thailand can boost its performance in the long-term future by improving the skill level of its labor force, investing in ICT infrastructure, enhancing the quality of teaching and research at Thai universities, and investing in targeted public research facilities, which would provide incentives for research and development by foreign and local firms. Development of the venture capital market in Thailand and productive channeling of the innovation and creativity there could really contribute to considerable growth for the general economic growth in Thailand.