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The Mekong region’s biggest markets — Thailand and Vietnam — are fast emerging as the brightest for startups
Two of the Mekong region’s biggest markets — Thailand and Vietnam — have now caught the fancy of investors that are sensing a good opportunity in the budding entrepreneurial ecosystem in the region.
A prime example is the business partnership forged in 2014 between Thailand-based investment bank Geexstar and Vietnamese investment advisory company Seedfund.vn to allow tech startups in the region get better access to venture capital and international investors.
Venture capitalist 500 Startups has also turned to Vietnam and Thailand for the next big business ideas.
Earlier this year, the company launched a US$10 million micro-fund for Thai startups called 500 TukTuks and in a recent interview with e27, 500 Startups’ Venture Partners Eddie Thai and Binh Tran called Vietnam a rising star and game-changer in Southeast Asia.
As these ecosystems continue to heat up, here are a few things for startups interested in tackling these markets to keep in mind.
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Grasp funding opportunities
Though still at a nascent stage, investors and venture capitalists are keeping a keen eye on the Mekong’s budding startup ecosystems.
The most prominent among them is 500 Startups. In Vietnam, it will invest in up to 20 startups over the next 12 months. The pay cheque size will typically be in the range of US$50,000 to US$100,000, but can go up to US$250,000.
500 TukTuks, launched in April 2015, will nurture and develop early-stage startups in Thailand, and focus on software technology and marketplaces.
It has so far invested in three companies — online handicrafts marketplace Blisby, API payment platform OMISE and Bangkok’s first co-working space HUBBA.
Some startup entrepreneurs in the region, who have exited in the past, have turned into investors. 500 Startups’ Managing Partner Khailee Ng, for example, is a serial entrepreneur who sold his last two companies to Groupon.
Tran of 500 Startups exited his social score startup Klout for US$200 million last year.
In addition, big conglomerates have also entered the scene to help mentor and fund startups. The three biggest telecommunications companies in Thailand — AIS, dtac and True — have their own accelerator programmes, offering valuable resources and investments for startups to scale their operations.
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Make the most of social media
With impressive mobile penetration in Thailand and Vietnam, startups need to be mobile and tap the power of social media.
With around 90 million in population, Vietnam has emerged as the market to watch out for in Southeast Asia. With 40 million Internet users and 20 million smartphone users, the country is growing fast, prompting global VCs and startups to make an entry.
Similarly, Thailand, had over 97 million mobile subscribers in 2014 and 26 million Internet users in 2013, amounting to penetration rates of 144.8 and 38.8 per cent (in a population of 67 million). This showcases an immense opportunity for startups and investors to tap into.
Thai consumers spend more time on their mobiles accessing social media sites than watching television and listening to radio; entrepreneurs have spotted these underserved markets.
Startups can use social media not just to reach out to consumers in the most cost-effective manner, but also as a tool for innovative ways to expand business.
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Study government policies
The governments of both Thailand and Vietnam are realising the potential that entrepreneurs and startups can bring to the national economy.
Startups should keep a close eye on the steps taken by local governments to create a conducive platform for them and take full advantage of the tax benefits and incentives provided.
The government of Vietnam, for example, is keenly supporting local businesses. Part of that support is partnering with the World Bank to improve funding for innovation.
And foreign ownership restrictions in several sectors are coming down, which is also helping create a healthy ecosystem.
On the World Bank’s ‘Doing Business Index’, which determines if a regulatory environment is conducive to starting and operating a local firm, the country rose from 99th in 2013 to 72nd in 2014 (out of 189 economies). This is a firm indicator of the Vietnamese government’s keenness to help startups.
In Thailand too in 2013 and 2014, the government made business less costly for companies through the reduction of the profit tax and the social security contribution rates. These are helping local firms start and operate with ease.
Thailand has climbed two places in 2015, ranking an impressive 26th on the World Bank’s ‘Doing Business Index’.
Network with other local startups
Startups and founders can be a great source of knowledge of how to deal with local issues. Apart from attending local meetups, co-working spaces cultivate a much-needed community for new entrepreneurs. They not only help lower the costs of renting an office, but also provide a more professional atmosphere for work and business meetings.
Thailand’s HUBBA is a good example of such an initiative that seeks to provide a shared, community-driven workspace for startup entrepreneurs and independent workers.
In north Vietnam, co-working space and incubator Hub.IT is central to the tech startup community. New space Toong, also based in Hanoi, provides startups, investors and mobile professionals a place to connect and network.
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