Grab faces fresh competition in Thailand, Southeast Asia's most fiercely contested on-demand market
A consortium is buying Robinhood in a move that shows corporations still dominate the startup scene in Thailand
Good morning,
This week’s Original story comes on a Friday as we dive into Thailand’s on-demand market. It is the most competitive in Southeast Asia, and now it has a new player after Robinhood—the no-commision Grab rival created during Covid—was bought by a consortium.
We’ll be back on Monday with our usual round-up.
Have a great weekend,
Jon
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Weeks after arch rival Gojek exited Vietnam to effectively end its regional strategy, Grab just got some new competition in Thailand.
Robinhood, a delivery and ride-hailing service run by leading bank SCB, has been acquired by a consortium led by Yip In Tsoi, a 98-year-old company with interests that span agriculture, construction and technology. The deal is valued at around $62 million (or 2 billion Thai baht) and it means Robinhood will live on despite SCB announcing earlier this year that it would close the unprofitable business.
Robinhood was launched in 2020 by Purple Ventures, SCB’s venture-building arm, to increase competition in the delivery market during the Covid-19 pandemic. It gained attention with its zero-commission model but later shifted to monetization. Despite this change, the platform still burned through nearly $160 million in four years.
The consortium is fronted by Yip In Tsoi (50%) but it also includes finance and real estate firm Brooker Group (30%), SCT Rental Car (10%) and IT company Loxbit (10%), a subsidiary of Loxley, another conglomerate
Southeast Asia’s most competitive on-demand market
Robinhood was initially a CSR play—SCB hinted it could help onboard the longtail of SMEs or develop unique lending products—but small market share and the unprofitable nature of its business ultimately meant it was no longer wanted by the bank.
The ride-hailing and delivery market in Southeast Asia seems mostly settled with Gojek's retreat, but Thailand remains one of the region's most competitive areas.
When it comes to ride-hailing, Grab is up against Bolt, the Estonia-headquartered company backed by SoftBank, and local player Line Man, a Thailand-focused offshoot of Japanese messaging app Line that’s looking to list in a public offering.
The food delivery space is even busier with Grab, Line Man, Shopee and Foodpanda—there is speculation that Lazada may enter the fore, too.
Yip In Tsoi isn't a company I'm very familiar with, and its tech business isn't consumer-facing. Instead, it focuses on areas like data centers and components. Given that Robinhood was going to be shut down, it probably sees this as an inexpensive opportunity to jump straight into the on-demand delivery industry with a rolling start.
The deal can’t go any worse than the previous on-demand fire sale which saw AirAsia acquire Gojek’s Thailand business for $50 million in 2021. That deal was part of the airline’s super app play, although AirAsia ducked out of buying Gojek Thailand’s payment business and briefly offered on-demand services in the country before quietly closing them.
The Yip In Tsoi story is fascinating because it brings a very traditional company into the consumer tech space for the first time but it is also a sad reminder that Thailand’s technology and startup scene continues to be dominated by corporations.
The Robinhood app
Corporations still dominate
Robinhood was an ambitious venture that tapped into the digital delivery boom during the pandemic, but it was a project that only a large company could support—ultimately leading to its short lifespan.
All of Thailand’s current ‘unicorns’—businesses valued at over $1 billion—have similar links.
Fintech Ascend Money raised $150 million at a valuation of $1.5 billion in 2021—but it is a spinout of mega conglomerate True
Line Man reached the hallowed $1 billion valuation mark in 2022 when Singapore sovereign wealth fund GIC led an undisclosed investment—but Line Man is a spinout of Line, which is part of $20 billion-valued LY Corporation
Delivery company Flash Express joined the unicorn club in 2021 when it raised an undisclosed round that was led by SCB—but Flash Express has been backed by major Chinese investors since its inception in 2017, raising $12.8 million on launch which is unprecedented in Thailand.
Opn may be the exception, but there’s a caveat.
It raised $120 million at a unicorn valuation in 2022 but, while it has offices in Thailand and started out with Southeast Asia products, its focus is very much on Japan and the Japanese market—indeed, Forbes called it “Japan’s newest unicorn” when reporting the round.
It’s tough to see things changing imminently in Thailand, but there are some green shoots. Before Covid, a plethora of corporate accelerates meant Thailand was producing new startups. Even if you discount the value a corporate accelerator can provide on entrepreneurship, it produced volume.
Ultimately, the story was the same as Robinhood’s demise. Banks including SCB, BBL and Krungsri, telecom operators DTAC, True and AIS, and oil firm PTT all decided that the effort and expense weren’t justified so that lifeblood left the system. (There’s renewed promise with a new Krungsri programmes and universities running demo days but it remains early.)
Corporations once flooded the market with accelerator programmes—but most shut down during Covid
When writing for The Ken in 2021, I speculated that IPOs could be the flywheel to kick off Thailand’s startup movement.
The Stock Exchange of Thailand (SET) is Southeast Asia’s third-largest bourse behind Indonesia Stock Exchange and Singapore Exchange, and it had looked to embrace both technology and less mature companies. E-commerce aggregator aCommerce and fashion retailer Pomelo were two examples of potential tech IPOs, but a global economic downturn and fairly arduous listing requirements have prevented the gate for tech IPOs in Thailand from opening.
Such listings would help kickstart the ecosystem by providing a track record of exits for investors—encouraging more investment and new investors to explore Thailand—and market liquidity, with employees seeing a return on their equity, encouraging them to start their own companies, create funds or simply invest as angels. Then there’s the halo effect. Success stories inspire students and future founders to get into startups and create their own business.
Those effects don’t happen when corporations are the dominant force in terms of new services and running investment funds. That’s what is holding Thailand back, for now.