A few weeks ago, I posted a comparative analysis of startup ecosystems around the world as part of a trip debrief following a 5-company delegation that Digital Ventures/Siam Commercial Bank led to Israel. The analysis centered around Israel’s status as the “Startup Nation”, and looked at its startup ecosystem side-by-side with leading ecosystems in the United States and Singapore. For good measure, I threw in Thailand so that our bank’s management could see where our country stood relative to these world-class ecosystems.

With regards to Israel, the numbers came out pretty much as expected, cementing its status as one of the leading hubs of entrepreneurship in the world. With regards to Thailand, the numbers likewise revealed what many already know: our ecosystem is quite nascent, and has a long road ahead in its transformation into a regional startup hub. But while the conclusions were in line with expectations, what was truly surprising were the magnitude of the numbers and metrics I had presented, and the yawning chasm between the world’s top startup ecosystems and our own. The analysis was quick-&-dirty, cobbled together rather hastily from third party sources from all over the Internet, but the reactions and responses were overwhelmingly positive, with some great feedback & follow-up questions. It was this feedback that inspired me to flesh out the analysis a bit more, adding a few new metrics, and including China in the comparison. So here is my revised 5-country tech ecosystem comparison.

Thailand’s approximately 600 startups equates to 1 per 113,000 people, a 12x differential to China and 60x differential to Israel.

The key takeaways:

1. Israel, the United States, and Singapore have incredible startup densities, boasting 1 startup for every 1,900 to 2,800 people, cementing their statuses as global hubs of entrepreneurial activity. China’s startup density is significantly lower at 1 startup for every 9,500 people, but its super-sized population definitely skews the ratio. However, if we assume the that the bulk of startup activity occurs in China’s coastal metropolises and top tier cities where half the population is concentrated, that ratio approaches 1 per 4,750 people, indicating a strong ecosystem on the rise. Meanwhile, Thailand’s approximately 600 startups equates to 1 per 113,000 people, a 12x differential to China and 60x differential to Israel.

2. The strongest startup ecosystems benefit from a number of key inputs, chief among them the number of venture capital funds active in the country and amount of venture capital financing those countries’ startups. Singapore and Israel are among the world’s fastest growing venture capital scenes, seeing US$625 and US$550 in inbound VC investment per capita, respectively. The United States, a stable and mature startup ecosystem, saw a very respectable US$212 in VC investment per capita. China’s US$23 per capita in inbound venture capital looks paltry in comparison, but is still a whopping 18x larger than Thailand’s US$1.30 of inbound venture capital per capita. Neighboring Singapore sees 480x more funding per capita over Thailand, a stunning gap for an economy that aspires to be ASEAN’s next startup hub.

3. The disparities are just as remarkable looking at another startup input/resource: the number of startup accelerators operating in the country. Here, Israel is the runaway leader, with 1 accelerator for every 17 startups, more than twice the support available to startups in Singapore, at 1 accelerator per 38 startups. China and Thailand have similar levels of support at approximately 1 accelerator per 86 to 90 startups, while America’s only has 1 accelerator for every 700 startups.

Singapore sees 480x more funding per capita over Thailand - a stunning gap for an economy that aspires to be ASEAN’s next startup hub.

4. VC funding and accelerators are all well & good, but the true worth of any startup ecosystem lies in its exit opportunities, and here, the world’s top ecosystems shine. In 2016, 2.3% to 2.4% of Israel & America’s startups found an exit. Singapore, a fast growing but still relatively young ecosystem only saw less than 1% of its startups exit, and China and Thailand’s exit opportunities were only a third of Singapore’s. Startups in Israel and the U.S. were 8x as likely to exit than counterparts in Thailand.

Why does Thailand suffer from such an outsized lack of entrepreneurs & startups? I’m sure there are a variety of factors to contribute to this, but there are two indicators worth considering:

1. Thailand woefully underinvests in its human capital, as well as its knowledge base. The percentage of the working age population with any sort of tertiary education is only 12%, compared to 30-45% for the other three countries.

2. Likewise, while the other four countries are investing 2-4% of their GDP in civilian R&D, Thailand’s expenditures amount to less than half of a percent. Consequently, the number of international patents filed (under the Patent Cooperation Treaty) amount to only 1 for every US$34 million dollars spent in civilian R&D, compared to 1 patent for every US$8 to 9 million in R&D spending in tech powerhouses Israel and the United States, and US$12 to 16 million in emerging tech hubs Singapore and China.

Thailand woefully underinvests in its human capital, as well as its knowledge base. Transforming Thailand into an innovation economy and startup hub is certainly a monumental task, but if I had to point to the lowest hanging fruit, I would look no further than education.

Transforming Thailand into an innovation economy and startup hub is certainly a monumental task, and it would be a gross oversimplification to break down all of its challenges to a single factor, but if I had to point to the lowest hanging fruit, I would look no further than education. This isn’t simply pumping more dollars (or in this case, Thai Baht) into the education system, but rather revamping the system to include more creative thinking, more experimentation, more problem solving, and certainly more emphasis on STEAM (science, technology, engineering , arts & mathematics) curricula. Introduce coding and maker spaces to students at an early age, and shift emphasis from tests & scores to more experiential education. There are no quick fixes to creating a sustainable startup ecosystem, but, to quote a Chinese proverb, a journey of a thousand miles begins with a single step.