🐰💬 3 Thai startup weaknesses. Good idea. But why grow up?

Ever wonder why a Thai startup who started with a cool idea is stuck at the beginning and can't grow up to Series A?

📊 Interesting statistics.

DEPA reports that in 2020, there are Thai startups in each growth phase as follows:

Pre-Seed: 82 cases with an average value of Baht 7 million Seed: 34 cases with an average value of Baht 43 million Pre-A: 12 cases with an average value of Baht 180 million Series A: 5 cases with an average value of Baht 410 million

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Looking at the big picture: Of the initial 82 cases, only 5 were able to advance to Series A.

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First of all, it's important to understand what Series A is, the first funding behind Seed, where the capital is used to aggressively expand the business. Most investors are Venture Capital (VC) who need to see that the business has a practical product, has an feedback market, and can make money.

Seed = "Money Try Ideas" Series A = "Serious Business Expansion Money"

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Analyze the three weaknesses of Thai startups. Good ideas, but difficult to grow.

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1️⃣ Access to Series A funding is harder than it looks.

Because it must prove that the business model has a market and has real acceptance (Minimum Viable Production).

But many startups have not reached this point, making it impossible to convince investors.

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Thai investors often focus on investing in grown-up or late-stage startups because they have clear traction and low risk, making it easier to assess payback opportunities.

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On the other hand, early-stage startups that are still Seed or Pre-A do not have clear sales numbers or fail to fully prove their business models.

It is perceived as high risk, making the opportunity to access capital to expand the business less serious.

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This results in market expansion, hiring more teams, or developing new products being done more slowly and more difficult than they should be.

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2️⃣ Financial and administrative discipline is also an issue.

Despite the good ideas, the team is good, but Series A investors need to see financial stability and management.

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Many startups have not done serious financial projection.

This means that the team is not able to predict revenue, expenses, cash flow and burn rate in advance, and often only make predictions or adjustments according to the actual situation, making investors unconvinced.

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Many teams still lack cost prioritization.

This makes the resulting capital often unbalanced to market or develop products, which does not meet the needs of Series A investors who want to see the efficient and clear use of capital to expand the market and generate returns; if spent blindly, investors will be reluctant to give large sums of money.

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3️⃣. Lack of a KPI and a clear follow-up system.

Many teams do not have Key Performance Indicators (KPIs) that can actually measure business success.

Investors need numbers that prove that the business is actually growing and that the capital provided will generate targeted returns.

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But the truth is, many startups measure results only according to their feelings or total sales without being able to parse details such as new customers, customer retention rates, or the efficiency of their investments.

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This makes investors think that business is not ready for large capital.

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In summary, focus on traction or proven signs that the business has real revenue and market.

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Check Yourself: Are Friends Ready to Prove Your Idea Can Really Grow Up?

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Source: Techsauce - Startup Demo Day & VC perspective

DEPA - Government perspective on startup investment

The Matter - Why startups fail in Thailand

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