Thai SME VC Fund

A venture-capital fund worth 25 billion Baht (roughly USD$ 757M)  will be set up to invest in SMEs with high potential in Thailand. The cabinet has already approved establishment of the SME fund and the first 500 million baht likely will be injected into it in February.

Finance Minister Sommai Phasee said: The fund will invest between 5% and 50% of the registered capital for firms in agriculture, industry, technology and value-added innovations. He said SMEs contributed to more than one-third of the country’s GDP, so the government wanted to provide capital to support their expansion.

Huge news as the Government of Thailand has agreed to set up a venture capital fund to help fund SME’s. As over 90% of the businesses in Thailand are small and medium sized enterprises (SME’s) – this should provide much needed capital in a country which previously had very few investment sources.

Banks traditionally do not loan out capital to any foreign owned enterprises. Also there is some collateral which is almost always provided in the form of a Chanote title. It is unheard of for financing against inventory however. If I am incorrect or you know of alternative funding sources in Thailand, please leave a comment below.

Here are the currently active VC firms in Thailand in the context of articles we have written:

• Cyber Agent Ventures sets up office in Thailand.
• Singapore government selects Golden Gate Ventures as a VC for co-investor of $120 MM fund.
• Galaxy funds page 365 Capital
• Ardent Capital raises 10M in fresh capital
• InVent, the venture arm of Thai firm Intouch Holdings PCL.

$757M is a significant amount of capital for a country which has had stagnated GDP growth over the past few years.

It will be very interesting to see:

1. Who manages this fund?

2. How are allocations made?

3.  What are typical investment sizes or capital injections?

4. What are the terms of the investments?

5. If/when the government expects a return and at what ROI?

6. What is the horizon on this fund?

7. What legal entity is set up to manage this fund, and how do they become a shareholder in the portfolio company?

If anyone has information regarding the aforementioned VC fund – please get in touch and I will update this page.