The National Innovation Agency (NIA) is set to significantly bolster Thailand’s startup ecosystem with a new 1 billion baht co-investment initiative. This strategic move, enabled by an updated royal decree, aims to provide crucial funding, particularly for startups navigating the vital pre-Series A to Series A funding stages. The agency anticipates that these enhanced funding avenues will be accessible to local startups by the end of the current year.
Strengthening Innovation and Commercialization
The upcoming version of the royal decree governing the NIA, effective from June 30, is designed to amplify the agency’s capacity in fostering the nation’s innovation sector and accelerating the commercialization of research and development outputs. A key provision within this updated legislation empowers the NIA to hold shares, engage in partnerships, and form joint ventures with various entities. These collaborations are permissible as long as the primary objective remains aligned with the NIA’s mission and not solely profit-driven. Furthermore, the decree explicitly allows the NIA to invest in trusts established for joint investment activities pertinent to its objectives.
Krithpaka Boonfueng, the executive director of the NIA, highlighted that these expanded authorities will enable the agency to offer more robust support to startups. “By the end of this year, I expect local startups to be able to access more sources of state funding, mainly during their pre-Series A to Series A funding rounds,” she stated. Any shareholding, partnerships, joint ventures, trust investments, or borrowing activities undertaken by the NIA will be subject to criteria to be finalized by the cabinet.
Introducing Three Distinct Funding Models
Ms. Boonfueng outlined three primary funding models that the NIA plans to implement:
- Co-Funding with Private Businesses: This existing model involves the NIA co-funding projects with private sector partners, providing grants that cover up to 75% of the project’s total value.
- Private Equity (PE) Trust Fund: A new PE trust, valued at 1 billion baht, is planned. The NIA and the Stock Exchange of Thailand (SET) are expected to contribute at least 500 million baht initially, with the remaining capital sought from private sector partners. A professional fund manager will oversee the trust’s operations.
- Holding Company Co-Investment: This model involves the establishment of a holding company, potentially in collaboration with holding firms associated with universities, to jointly invest in promising startups.
Across all these models, the NIA intends to cap its equity stake in any single startup at a maximum of 20%. This approach is designed to ensure that startup founders retain significant control and flexibility in managing their businesses. The NIA’s investment focus will be directed towards deep tech and digital technologies that exhibit high growth potential.
Regarding budget allocation, 40% of the NIA’s total budget dedicated to these initiatives will be channeled into the PE trust. The remaining 60% will be divided equally between the holding company model and the co-funding model.
Seeking Tax Incentives for Investors
In parallel with these funding initiatives, the NIA is engaging with the Ministry of Finance to explore the possibility of offering tax incentives or exemptions for investors in startups. The agency also aims to extend these benefits to companies that leverage product licenses originating from university research and development (R&D) to build their businesses. These proposed tax incentives would specifically apply to revenue generated from such licenses.
“Currently, tax exemption for expenses only covers R&D, but we think this should be expanded to cover innovation investment,” Ms. Boonfueng explained, emphasizing the need to broaden the scope of tax support beyond just research and development expenses to encompass broader innovation investments.
Revamping the ‘Innovation List’
In a significant administrative shift, the cabinet has approved the NIA’s responsibility for overseeing the ‘Innovation List,’ a transfer from the National Science and Technology Development Agency. This transition is slated for completion by October.
The ‘Innovation List’ serves as an official registry of products and services developed by Thai individuals or organizations within Thailand, which have undergone formal certification and registration. Its primary purpose is to encourage government agencies to procure these certified innovations, thereby stimulating market demand and driving research towards practical commercial applications.
To enhance transparency and efficiency, the NIA plans to develop a dedicated platform. This platform will allow businesses applying for inclusion on the Innovation List to track the status of their applications. Furthermore, the NIA intends to open the approval process for the list to external experts, bringing in broader industry knowledge.
The agency will also introduce a tiered system for the duration innovations remain on the list. While some innovations might have a listing period of four to five years, others, particularly those in sectors like wellness, health tech, or other forms of deep tech with longer development cycles, may qualify for an extended period of up to eight years. This contrasts with the current uniform eight-year limit.
Guaranteed Market Access for Startups
Further supporting the startup ecosystem, the NIA will facilitate a process where startups can pitch solutions directly addressing specific challenges or “pain points” faced by government projects. Selected applicants or winners from these pitching sessions will be guaranteed access to participate in relevant upcoming government projects. This initiative aims to provide a direct pathway for innovative solutions to be adopted and scaled within the public sector.
Collectively, these measures are designed to equip Thai startups with the necessary resources and opportunities to scale effectively, not only domestically but also on a global stage.
