According to a Harvard study, due to digital disruption, since the year 2000 around 52 per cent of Fortune 500 companies have “gone bankrupt, been acquired, or ceased to exist”, and over 75 per cent of S&P companies are set to be replaced by 2027. In the 4.0 era, where tech startups and SMEs are causing industrial revolution across sectors through innovation, corporates are struggling to keep up and this is where corporate innovation can help bring these once-established companies into the 21st century and beyond. An innovative, out-of-the-box strategy with innovation at its core is the need of the hour for any business to survive today and corporations are no exception to this.
Corporate innovation comprises different aspects — product, division and business model innovation to name a few. The likes of Uber and Netflix are excellent examples of companies that have disrupted their respective industries by leveraging technology and implementing business model innovation.
Need for corporate innovation in Thailand: Challenges and opportunities
Southeast Asia is a digital haven and arguably the next Silicon Valley, and at the centre of this region is Thailand. In 2017, there were 600 startups in Thailand. This year, there are 2000. A bustling ecosystem with leading entrepreneurs, robust infrastructure, strong consumer trust, and most importantly, smooth capital flow from corporations and investors, Thailand’s startup scene is a promising one. However, there are still a few challenges when it comes to corporate innovation and how the lack of it affects startups. As the startup scene matures, there is a need for a better, closer relationship between corporates and startups; This is where corporate innovation can help.
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Industry leaders are starting to realise this gap with many corporates venturing into startup funding, establishing accelerators and incubators, and some even going the extra mile to launch corporate venture capital with the aim of strengthening relationships with startups and harnessing innovation. Unfortunately, not all stakeholders have the know-how of working with startups and engaging business units with technologies, which leads to a limited or confined interaction between the two parties. Hence, despite the growing demand for innovation and disruptive technology, many corporate innovation strategies eventually fail. According to Harvard Business School professor Clayton Christensen, there are over 30,000 new products introduced every year, and 95 per cent fail due to lack of innovation. Big names like Kodak, Nokia and Motorola have succumbed due to sheer lack of innovation.
As such, Krungsri Finnovate’s Finnoventure Fund I is helping the Thailand startup ecosystem thrive by enabling corporates to innovate and participate in digital disruptions by leveraging technology. Krungsri Finnovate — a leading corporate venture capital supporting and investing in domestic and regional startups — has launched the country’s first startup private equity trust fund called “Finnoventure Fund I”. This fund is not only an excellent investment opportunity but also a great way to get access to business information and build partnerships with promising startups in the region.
Bolstering growth in Thailand by bringing startups and corporates together through innovation
With Finnoventure Fund I, Krungsri Finnovate aims to enable corporate innovation while creating a healthy future for both startups and corporates in Thailand. They spent the first phase or the 1.0 era between the years 2017 and 2019 setting up startup incubators to understand how startups work on the ground. In 2020, as they entered the 2.0 era, the core emphasis was placed on investments in and partnering with startups for the developments of innovations for business expansion. Currently Krungsri Finnovate has worked with more than 60 startups in over 100 working projects. Starting this year, in the 3.0 era, Krungsri Finnovate is ready to leverage investment in private equity trust funds so as to create growth opportunities for rising startups while generating investment returns and business growth for investors at the same time.
Finnoventure Fund I is set at 3 billion baht with a three-year investment term and ten-year fund life targeting both corporate and individual investors with ultra-high net worth income. This fund is the first of its kind in Thailand. “To be the first hereby means that we are the first CVC that enables external investors to invest into our fund via PE-trust structure in Thailand (following key role models like, Softbank, SBI and Credit Suisse). We aim to be a sustainable business unit selling our experience, know-how, and secret sauces of investment execution to external parties, shared Sam Tanskul, Krungsri Finnovate’s Managing Director.
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Krungsri Finnovate believes that the scope of social commerce and eCommerce in Thailand is great owing to factors like a fast adapting population, a growing online marketplace, and increasing social media penetration. These trends have expedited further amidst the pandemic. Today, Thailand has 46 million registered Facebook users. Studies reveal that social commerce revenue in Thailand grew from $3 billion three years ago to about $11 billion in 2020, half of the total e-commerce market. Another notable trend is that in Thailand, almost half of all e-commerce takes place through social media or chat rooms on Facebook, WhatsApp or Line’s app. These are the trends that Finnoventure Fund I is tapping into to foster a robust startup ecosystem in the country.
Sam said, “We are an underserved bank country where a number of businesses and retailers are not able to leverage financial services, such as investment and lending properly, proven by a number of Ponzi schemes and loan shark cases. Thus, there is huge potential for any fintech company that can bridge these gaps and help Thais to improve on financial literacy. Besides, Thais hold the largest ratio of automobiles per head. And, we have considerable experience and industry knowledge in these emerging tech trends. Plus our core investors who join the Fund with substantial amounts will be able to work together to endorse the startup ecosystem through our Strategic Partnership Expertise.”
Bringing Thai startups to the region and beyond through meaningful partnerships and collaborations
The core objective of Finnoventure Fund I is to create a collaborative ecosystem with innovation at its core and help Thai corporates innovate while enabling startups to get the right kind of support they need to further their business goals.
“We aim to encourage corporates to understand more about the potential of tech startups, and understand how nontraditional innovative, disruptive business works in the 4.0 era while encouraging startups to thrive by getting the right support from corporates without deviating from their core focus areas, said Sam.
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Also, Krungsri Finovate is a corporate venture capital arm under the Bank of Ayudhya (BAY) and Mitsubishi UFJ Financial Group (MUFG), is one of the bank’s major shareholders. MUFG brings extensive global startup investment experience to the table. With names like Grab and Coinbase in their portfolio, they will bring invaluable insights and industry expertise. “With MUFG, Finnoventure will have access to industry insights, expertise, network and experience. We also plan on leveraging MUFG’s presence in other Southeast Asian countries, such as Vietnam and Indonesia, to help us establish ourselves as a leading regional VC” added Sam.
To know more about Krungsri Finnvoate’s Finnoventure Fund I, visit https://www.krungsrifinnovate.com/en/Home
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Photo by Alexandr Podvalny from Pexels
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This article is produced by the e27 team, sponsored by Krungsri Finnovate.
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