No Money, No Startups

Without proper funding, it is nearly impossible for entrepreneurs to launch and maintain a successful startup business. But investment capital is often not enough as business advice from angel investors also is needed.

Chalermphon Tuchinda, director of Software Park Thailand, said Thailand is currently in need of “angel investors” to help Thai startups grow their businesses.

Software Park Thailand is a government agency set up during the early stages of the startup boom. It aims to be an incubator of support for Thai startups whose businesses focus on software development.

Mr Chalermphon said the most successful Thai startups were founded by people with more than 10 years of working experience, while businesses founded by new graduates have less chance for success.

“And that’s not because they aren’t smart. It’s because they lack experience. Most successful overseas startups are run by people who started working when they were 14-or-15-years-old, but startups in Thailand are not like that. They would need support and consultation from angel investors.”

An angel investor is usually an affluent individual who provides funding to a startup business in exchange for ownership equity.

A startup business can typically start off with a budget of about 100,000 baht, which is enough for the founders to survive a few months while focusing on business development. With proper business advice and guidance from investors, they have a greater chance to successfully bring their services or products to the market. Once their businesses come into shape, the “venture capitalists” (VC) then come in to help them further develop.

Startups who have experienced angel investors as advisers normally achieve actual success compared to fledgling businesses who receive capital but no advice. In this regard, the angel investor is truly a guardian angel for the startup business.

Mr Chalermphon said an ideal angel investor should have the following qualities:

– Knowledge about the business that they will invest in. For example, those who invest in business logistics software should specialize in business logistics so that they can help ensure that the developing software can provide solutions for end users. Or, they should have connections within the business networks that can help test the software.

– A spirit of altruism. Angel investors should have a desire to give back to society by helping a new generation of entrepreneurs start their own businesses. Angel investors overseas usually look to guide these startups to success before considering the return on their investment. Some invest in startups in order to have topics of discussion among peers and also to stay updated on technology trends.

– Have investment capital. This is not a serious issue as most angel investors are already billionaires who wish to remain low profile while helping behind the scenes.

Mr Chalermphon said that in order to encourage millionaires to become angel investors, the government should offer tax incentives. For example, in the UK, angel investors can benefit from several tax relief programs if they invest in startup businesses. This has helped encourage more people to become angel investors. And this is a way to help grow startup businesses in Thailand too.

Reference: Forbes Thailand