INVESTMENT NEWS THAILAND

Thailand is launching a stock exchange just for startups; no revenue required

The report by Nikkei Asian Review states that companies could list on the very day they are established, even without any record of earnings

By Yon Heong Tung

For most startups, the early months of their inception is about building their Minimum-Viable-Product (MVP) or finding the right product market fit.

But for startups in Thailand, they have the option to go public right on day zero.

Say what? Yes, you did not misread anything.

Thailand is launching a new stock exchange that caters specially to startups, according to an exclusive interview with Kesara Manchusree, president of the Stock Exchange of Thailand (SET) by the Nikkei Asian Review.

The new exchange will be unlike Thailand’s two existing stock exchanges — SET and mai — which are tightening regulatory rules and other criteria amid a surge in listings, in part due to second- and third-generation family businesses seeking to go public. The proposal for the new exchange is still being drafted, but the expected rollout will be in the third quarter of 2017.

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Startups can list on the new exchange even if they have not earned any revenue. They can choose to issue equity and non-equity products including bonds and options. Investment may, however, be limited to accredited investors, but that detail has not been finalised.

Naturally, the volatility of stocks of untested startups is high; an investor might be able to reap two to three times the initial investments or lose them all together. Investors could also receive dividends in the form of company products or other benefits instead of cold hard cash. Investors may also become board members in some cases.

Aside from this startup-focussed stock exchange, the SET will also be launching a new index for other smaller cap companies called sSET. These companies will be vetted based on their stock’s liquidity and free float. It is expected that around 100 companies will be listed on this index when it is launched in January 2017.

So for startups looking to incorporate in a Southeast Asian country, Thailand might be a wise and attractive choice.

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Image Credit: tktktk / 123RF Stock Photo

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Mohan Belani
Mohan Belani • Co-founder and CEO at e27
Bold move, not sure how well this will work. I wonder how they will attract liquidity for the exchange. Without it, it defeats having the exchange in the first place.
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Daryl Chung
Daryl Chung • Project Director at e27
If they are limiting it to only accredited investors then it wont be as liquid as most exchanges, but it might be a good first step to involve more institutional funds/investors in the startup ecosystem.
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Clemen Chiang
Where are the finer details?
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Daryl Chung
Daryl Chung • Project Director at e27
Everything is speculative now since there's not much details being released yet. It would be very interesting to see how the bonds would be priced and how many startups would embrace debt financing. Will also be interesting if the listing can double-up as a neutral platform/external validation for market sentiment and market valuation of a startup.
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Rah Yuliantoro
Rah Yuliantoro • Bringing Locasy.ID to the front end
I read it as some kind of expansion from the crowdfunding scenario. Investor pledges to a company and gets his reward in the form of the company's product (which is actually a "promise" to the product). Then later on, this investor sells his "promise" (which can be replaced with "benefit" or "shares") to other investor at a price they both agree. I think this is basically an exchange. If not in the form of an official exchange, this is a secondary (black?) market.
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Varun  Mittal ( 海王•米塔尔)
Varun Mittal ( 海王•米塔尔) • Group Head, helloPay Partnership & Marketing | Alibaba | Lazada | Rocket Internet | Fintech | Community Builder
Deutse Bourse Group has already announced one in Germany with exact launch date of March 1 - http://www.dailymail.co.uk/wires/reuters/article-3957600/Deutsche-Boerse-create-new-market-startups.html
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Ivan Choong
Ivan Choong • Marketing + Technology
Its definitely a interesting move for thai exchange, they want to be a platform to link start-up and investor, haha
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