Financing of Tech Startups in Selected Asian Countries
Tech startups rely on an array of financing sources, and venture capital is not a common source.
In many Asian countries we observe a rapid expansion of technology-oriented startups. Governments hope that these startups will boost economic growth, create jobs, and foster sustainable development. However, transforming an innovative idea into a successful business is not easy and is constrained by limited access to finance. We analyze access to finance for tech startups in four sectors – greentech, agritech, edtech, and healthtech – that are linked directly to the Sustainable Development Goals. We focus on four countries, Cambodia, India, Thailand, and Viet Nam, and include insights from interviews with startups, incubators, and other players. We find that tech startups rely on an array of financing sources and that venture capital is not a common source. In addition, greentech and agritech startups produce products that require long-term support through the design, testing, prototyping, and certification stages. Such “patient capital” is in short supply. On the positive side, enterprises in development-oriented sectors can seek funds from impact investors and international development (aid) agencies.
WORKING PAPER NO: 1115