“Role of Business Development Service of Office of Small and Medium Enterprise Promotion and Venture Capital for SMEs”
Chamaiporn VisedmongkolAdvisor to SMEs
Office of Small and Medium Enterprise Promotion (OSMEP)
What is Business Development Service (BDS)
Business Development Services (BDS) are services that
improve the performance of the enterprise, its access to markets, and its ability to compete.
Scope of BDS include training, consultancy and advisory services, marketing assistance, information technology development and transfer, and business linkage promotion.
Committee of Donor Agencies for Small Enterprise Development : World Bank Group
Why Business Development Service (BDS) for SMEs
SMEs play an important role in : - Poverty reduction and economic growth by generating employment and incomes- Empowerment of low-income workers- Development of entrepreneurship & skills
BDS can raise SMEs productivity by addrsssing key constraints :- Low skill levels- Weak management, financial accounts, marketing- Low level of technology- Weak linkages and support systems
Employment
Notes : 1. There were 0.3% of the enterprises whose information on size was unavailable.2. GDP of agricultural sector was not included.3. There were 2.2% of the export transactions whose information on the exporters’ size was unavailable.4. Refer to 1 USD 7 35 Baht
Total
2,843,795
(24.0%)
9,1 62 ,632 (76.0%)
No. of Enterprises
13,477 (0.6%)
2,359,304 (99.4%)
42837, ,976 (71.1%)
1 ,7 4 1 ,8513.(28.9%)
GDP(บาท)
42067
60
(61.2%)
3536, ,947 (38.8%)
Export(baht)
6,025,648.99,122,68812,184,2902,372,781
4
Thai SMEs Profile (2008f)
5
STRENGTHESSTRENGTHES
High flexibility and adaptabilityHigh flexibility and adaptability High utilization of local/ domestic High utilization of local/ domestic
resources & knowledgeresources & knowledge Well performed in skill-based, Well performed in skill-based,
craftsmanship and hospitality sectors : craftsmanship and hospitality sectors : food; handicrafts; fashion products; food; handicrafts; fashion products; tourism and related products & servicestourism and related products & services
Easy business access and quick consumer Easy business access and quick consumer approachapproach
THREATSTHREATSOPPORTUNITIESOPPORTUNITIES
Trends of new business approaches favor Trends of new business approaches favor SMEsSMEs
Allow for business alliance with LEs and Allow for business alliance with LEs and MNCsMNCs
Potential for the creation of new genre of Potential for the creation of new genre of entrepreneursentrepreneurs
SMEs promotion is national agenda with high SMEs promotion is national agenda with high level of significantlevel of significant
WEAKNESSESWEAKNESSES
Losing competitiveness in labour - intensive & Losing competitiveness in labour - intensive & resource-based sectorsresource-based sectors
Weak production structure; Poor management; Weak production structure; Poor management; Incapable in marketing; Lack of product Incapable in marketing; Lack of product development; Employing low quality development; Employing low quality workforces; Using out of date technology’workforces; Using out of date technology’
Limitation in applying good governance: Limitation in applying good governance: accounting system; consumer & environmental accounting system; consumer & environmental responsibilityresponsibility
Pressure from Globalization:Pressure from Globalization: - Economic integration between countries- Economic integration between countries - FTA on Goods/Services/ Investment - FTA on Goods/Services/ Investment - New form of NTBs- New form of NTBs
- Entering of emerging economies in world - Entering of emerging economies in world market systemmarket system
High competition results in Nutcracker situationHigh competition results in Nutcracker situation Obstacles from public administrationObstacles from public administration
4
Main Agencies to SMEs Promotion
PolicyPolicy
ImplyImply
SupportSupport
OSMEPOSMEP To create SME Promotion Strategies To create target sector & definition for SME To Cooperate with other concerned agencies SME Information Center & enabling factor supports Regional
•VC
IEAT
•Support credit to SME•Credit Guarantee
OSMEP SME BANKONE-ASSET
• To create investment Policy for SME
•Benefit forSME
• To support & promote environment& community
MOCMOC
MOTSMOTS
MOCMOC
MOACMOAC
MOSTMOST
MOFMOF MOLMOL
DIP
TISIISO
SME BANKSICGC
DIW
FTI , TCCSMEs Entrepreneur Association
MOIMOI
• Standard to SME & International Standard
MOPHMOPH
• To develop resources to SME
ISMEDFTPI
OPDC
BOIBOI
SPECIALIZED INSTITUE
•To establish Industrial Estate Authority for SME
• To promote industries & entrepreneur
• To develop technology & employees
•Training & develop labor force
• Private sector to promote SME
Main Agencies to SME Promotion
1. Act as the mechanism of the SMEs Promotion Board to coordinate relevant agencies in public and private
sectors and SMEs entrepreneurs to contribute in the harmonized direction
2. Analyze and formulate SMEs promotion criteria as well as recommend policies and plan of SMEs promotion
3. Coordinate and formulate the operational plan for SMEs promotions
4. Coordinate, encourage, monitor and evaluate the work of relevant agencies in public and private sectors
5. Study and prepare reports on SMEs situation
OSMEP Mission Mandated By SMEs Act B.E. 2543
6. Recommend the amendment of laws and regulations obstructing
the promotion and development of SMEs
7. Administer the SMEs promotion fund
8. Reinforce, expand and cooperate in international issues and act as
the representative of Thai SMEs on global arena
9. Recommend measures on monetary, finance, tax issues so as to
support all SMEs relevant parties
OSMEP Mission Mandated By SMEs Act B.E. 2543
“ To be the country’s central organization in formulating SMEs
promotional policies and strategies as well as coordinating
governmental and private working systems in achieving the
strong and sustainable growth of SMEs as the main driving force
of the country’s economy”
Vision
Role and Responsibilities of OSMEP
OSMEPOSMEPAction bodyAction body
--MOIMOI --MOCMOC
--MOACMOAC --MOSTMOST
ETC.ETC.
SMEsSMEs
MasterMasterplanplan
ActionActionplanplan
The Board of SMEs PromotionThe Board of SMEs Promotion RightsRights &&
RegulationsRegulations
MentorMentor , , ConsultantConsultant ProjectProjectss
Venture Capital FundVenture Capital Fund
Incubation ProjectIncubation Project
The Executive Board The Executive Board
OSMEP- Formulate Master & Action Plan- Create Mechanism in implementing-Allocate Budget- Monitor and Evaluate
Central
• Sectoral Strategies
• Policy / Action Plan
• Projects under SMEs Promotion Action Plan
OtherPublicSectorAgencies
State Enterprise
Public Org.
Ministry
Chamber of Comm./FedOf ThaiIndustries/Bankers’Assoc.
Network to Promote Network to Promote SMEsSMEs
-Board of SMEs Promotion
-Executive Board of the Office of
SMEs Promotion
International Governmental & Private Units
• MOU • Action Plan • Coordination
Regional• SMEs Data
• Action Plan
• Registration
• Service Provision
• Service Provider Creation
• SMEs University
Governor
ProvincialChamber of Comm.
LocalAdmin.Agency
LocalMinisterialOffice
ProvincialIndustrialFederation
Academics
• Community/ Local Product
- Implement- Report Operational Result- Identify Problem/Demand
Academic/ExpertiseInstitution
- Implement- Report Operational Result- Identify Problem/Demand
OSMEP Regional offices
SME University / e-SMEs University
Incubation Center
Advisory Services
Pro
duct
&
Ser
vice
Dev
elop
men
t
Bus
ines
sD
evel
opm
ent
Tech
nolo
gyD
evel
opm
ent
(Com
petit
iven
ess)
Exp
ort M
arke
t
Dev
elop
men
t
Financial Support
SeedFund
ConsultancyFund
Intellectual Property, Internationalization F.
Stren
gth
en S
ME
MonitoringSystem
Venture CapitalFund
Later Stages
Expansion
SM
E Early Stage Growth Stage
Implementation Tools
MachineFund
What is Business Development Service (BDS)
Business Development Services (BDS) are services that
improve the performance of the enterprise, its access to markets, and its ability to compete.
Scope of BDS include training, consultancy and advisory services, marketing assistance, information technology development and transfer, and business linkage promotion.
Committee of Donor Agencies for Small Enterprise Development : World Bank Group
SMEs University E-SMEs University Incubation
Training
SMEs University
Helping the SMEs entrepreneurs to establish themselves and grow with sustainability
Upgrading their knowledge so as to be capable of managing business with efficiency and to be eligible for accessing wide range of support
Objective:
Producing of SMEs University Curriculum : the pilot project for entrepreneurs to run their businesses with sustainability
Development of Service Providers : train-the –trainer programme
- Level of providing general information
- Level of general training/basic consulting service
- Level of advances workshop
- Level of in-depth consulting service with specific focus for each industry/cluster
Mission :
Educational institutes : Bangkok University, Rajamagala University of Technology located in Bangkok and rural area, Prince of Songkla University, Thammasat University, Assumption University, etc.
Other organizations : Institute for Small and Medium Enterprises Development (ISMED), Department o Industrial Promotion, SMEs Bank, Office of Vocational Education Commission, Technology Promotion Association (Thailand-Japan)
Concerned Agencies :
e-SMEs University
Developing the cooperation for creating good business knowledge for SMEs
Increasing the potential of entrepreneurs in various aspects through academic knowledge and learning from experiences
Enhancing the knowledge-based society
As sources of SMEs managerial knowledge
Objective:
Concerned Agencies :
Assumption University (ABAC)
Academic responsibility Develop curriculum and modules Lecturing and knowledge transfer Evaluate and provide certificate or declaration for achievement
OSMEP
Support Budget Co-develop curriculum and modules Provide the students
Curriculum and Modules :
12 Modules :SME101 Start-up the BusinessSME102 Marketing Management for SMEsSME103 Financial Management for SMEsSME104 Accounting & Budgeting for SMEsSME105 Production & Service Management
for SMEsSME106 Sustainable Business DevelopmentSME107 Analysis of Trend,
Business Opportunity, Business Strategies for SMEs
SME108 Innovative Creation for SMEsSME109 ICT & E-commerce for SMEsSME110 SMEs & Marketing in DepthSME111 Risk Management & Internal Audit
for SMEsSME112 Business Plan for SMEs
Business Potential Development
6 Modules :SME201 Role & Responsibilities of
OSMEPSME202 BrandingSME203 Knowledge ManagementSME204 Cost ManagementSME205 Export & ImportSME206 Supply Chain & Logistics
Business Management
Number of Student (Jan 08-May 09) = 23,690
Number of accomplishment = 596 (2.5%)
62.2% are men with high educated
Mostly (>90%) are small size which less than 5 years of establisment
50% are in Bangkok and metropolitan area
Achievement :
Incubation
Productivity & Competitiveness Tool ♦ Incubation Program Incubation Program
Help SME Grow with Help SME Grow with Sustainability on Sustainability on Knowledge-and-Skill BaseKnowledge-and-Skill Base
Help SME Successfully Help SME Successfully Access Financial InstitutionAccess Financial Institution
Support on MarketingSupport on Marketing
Provide SME with Facilities Provide SME with Facilities at Affordable Costat Affordable Cost
➱
➱
➱
➱
Productivity & Competitiveness Tool ♦ Incubation Program Incubation Program
Give Consultancy Service Give Consultancy Service to SMEto SME
Visit SME at Their Sites Visit SME at Their Sites Once a MonthOnce a Month
Monitor Operation of SMEMonitor Operation of SME
Help SME in Dealing with Help SME in Dealing with Relevant AgenciesRelevant Agencies
➱
➱
➱
➱
CORE ORGANIZATIONS CORE ORGANIZATIONS IN BUSINESS INCUBATIONIN BUSINESS INCUBATION AREAAREA
OSMEP Office of SMEs Promotion, Ministry of Industry
CHE Commission of Higher Education , Ministry of Education
NASTDA National Science and Technology Development Agency, Ministry of Science and Technology
BY OSMEP
BY CHE
BY NSTDA
Business Incubators Business Incubators
in Thailandin Thailand
Business Incubators Business Incubators
in Thailandin Thailand
Type of Business IncubatorType of Business Incubator
Trade sector
Business IncubatorTechnology
Business Incubator
Emphasis on•Business development on Innovation process and Ideas/design
Emphasis on•Business development on Technology Innovation
Service sector Bio-Tech, Nano-Tech
IncubationIncubation
Manufacturing sector
Business Training and CoachingBusiness Training and Coaching
Financial Analysis& Risk
Management
Tax Plans
FinanceManagement
Legal &Governance
IT StrategyManagement
Marketing
Negotiation skill
Presentationfor
Business
Business Plan
Business Foundation
Training
Industrial TrainingIndustrial Training and Coachingand Coaching
IndustrialMarketing
Analysis
BusinessProcesses
(Good practices)
TechnologyAdvise
Five ForceAnalysis
&Value Chain
ProductPositioning &Development
IndustrialTraining
1. Setting up qualifications 2. Announcing for candidates 3. Recruiting potential incubators4. Co—conceptualizing of operation5. Funding 6. Monitoring & evaluation
The Study of incubation system suitable for the Nation
The OSMEP as the central planning office in The OSMEP as the central planning office in developing INCUBATION in Thailanddeveloping INCUBATION in Thailand
ROLES OF OSMEPROLES OF OSMEP
The support of establishing incubators
1. Establishing the pilot incubators(2001 – Kasetsart University 2003 - Chulalongkorn University/King Mongkut’s University of Technology Thonburi)
2. Creating the study of master planfor developing business incubationsystem (Chulalongkorn University)
Incubatee Admission CriteriaIncubatee Admission Criteria
CorrespondingWith OSMEP’s
StrategicIndustry
CorrespondingWith OSMEP’s
StrategicIndustry
Personal&
Self supportFinancial
Personal&
Self supportFinancial
PracticalBusiness
Plan
PracticalBusiness
Plan
Business senseand
Entrepreneurship
Business senseand
Entrepreneurship
Opportunityof
CommercializedMarket
Opportunityof
CommercializedMarket
Incubation ProcessIncubation Process
InterviewSWOT & Needs Assess
BusinessMgt.
Training
BusinessPlan
Development
Start-upCompany
ExecuteInitial
Business act
SWOT &NeedsAssess
BusinessMgt.
Training
BusinessPlan
Development
Start-upCompany
Interview
Objective To select suitable incubatees who match with
incubator’s mission Input
Candidated incubatees with initial business plan Process
Interview Evaluate Business sense and Entrepreneurship Marketing potential of products or services Organization and financial readiness
Output Accepted incubatees
ExecuteInitial
Business act
InterviewBusiness
Mgt.Training
BusinessPlan
Development
Start-upCompany
SWOT & Need
Assessment
Objective To prepare and evaluate the SWOT of each
incubatee and assess the business development needed.
Input Initial business plan, Status of each incubatee
Process Prepare SWOT analysis Evaluate the business development needed
Output Incubation plan of each incubatee Assign mentor to each incubatee
ExecuteInitial
Business act
InterviewSWOT &
NeedAssessment
BusinessMgt.
Training
ExecuteInitial
Business act
Start-upCompany
BusinessPlan
Development
Objective To refine incubatee’s business plan after training
and having business plan discussion with advisors, mentors.
Input Initial business plan and revised business objective
Process (Incubatee/Mentor/Advisor) Business development plan SWOT analysis after receiving initial incubation
Output Refined Business plan SWOT analysis
InterviewSWOT &
Need Assessment
BusinessPlan
Development
Start-upCompany Business
Mgt. Training
Objective To provide training on business management
principles that essential to incabatee’s needs Input
Incubation plan of each incubatee Process
Matching training courses, instructors, coaches for each incubatee’s development plan
Output Progress report and test of the knowledge of
each incubatee
Execute Initial
Business act
InterviewSWOT &
Need Assessment
BusinessMgt.
Training
BusinessPlan
Development
Start-upCompany
ExecuteInitial
Business act.
Objective Start testing the business plan by executing all
necessary business activities Input
Refined Business plan Process (Incubatee/Mentor/Advisor)
Execute Business activities with real transaction Output
Evaluation report from the business results
InterviewSWOT &
Need Assessment
BusinessMgt.
Training
BusinessPlan
Development
ExecuteInitial
Business actStart-up
Company
Objective To prepare all the necessary step to start up the
company Input
Refined Business plan Process (Incubatee/Mentor/Advisor)
Organize the staff, funding, establish network, start up the company
Output Company registration
Funding StructureFunding Structure
60 % by OSMEP
(e.g. fee of mentors, advisors)
30% by Incubator
(In-kind, In-cash)
10% by Incubatee
Monitoring & Evaluation Reports
Incubation Centers OSMEP
Quarterly progressive report
Quarterly report for budget subsidy
Incubation Plan
Personal incubation report
Recruitment form
Consulting service report & evaluation form
Training course evaluation form
Satisfaction evaluation form
Performance evaluation report form
Key Performance Indicators
Number of attended entrepreneurs must not be less than 10 and 80% or more must be satisfied with the incubation
80% or more of the completed ones must be able to establish business (register with MOC) within 3 years
Number of employment must be not less than 2 employees per the completed one
Significant better business performance and continuing on their businesses within 5 years
Output of OSMEP Incubation Program
Output 2005 2006 2007 2008 Total
Number of Attended
102 134 175 10 421
Number of Completed
41 35 117 120 313
Number of Attending
- - 55 10 65
Number of the Completed SME from Incubation Center (by Type of Industry)
Industry
Software, 45, 14%
Spa Product, 14, 4%
Gems and Jewelry, 50, 16%
Trading, 3, 1%
Service, 15, 5%
Other, 108, 35%
Food, 78, 25%Food
Software
Spa Product
Gems and Jewelry
Other
Service
Trading
Outcomes of OSMEP Incubation Program
Amount of Capital Registered : Before
Amount of Capital Registered : After
The Completed Incubatee
278,250,000 379,360,000 (36.33% Increase)
Registration with the Ministry of Commerce :
Employment :
Number of Employment : Before
Number of Employment : After
The Completed Incubatee
1,033 1,891(83.05% Increase)
Thai Business Consultant System Development for SMEs
Full-Circle Consulting Service
Advisory Services
Thai Business Consultant System Development for SMEs
Objectives :
• Thailand will have a brain bank of Thai consultants who are knowledgeable, proficient, and have professional ethics with the quality acceptable among the public and private entities, and SMEs entrepreneurs.
• There will be a consultant supervising system and a high standard database of consultant directory that could be responsive to the needs of SMEs
Mechanism Responsibilities
The Executive Board
The Sub-committee
Thai Business Consultant Development Center
OSMEP
• Identify the policies and measures • Identify the rules, qualifications, criteria, selecting, certifying Thai Business Consultant Development Center• Supervise the request for budget of Thai Business Consultant Development Center
• Training, developing, supervising, and certifying the quality of consultant
Appoint
The external evaluation unit • Evaluate the project performance
• Issuing the notifications, rules, regulations for registration, renewal, withdrawal of the registration of the consultant• Request for approval of budgetary allocation for Consultant center• Center of registration & Consultant center
Full-Circle Consulting Services
• Free of charge consultation and advising services for SMEs, students, and people who acquire the recommendation regarding the business
• The topics are covered as how to start the businesses, finance, domestic and international marketing, franchise, business law, taxation, branding, design, etc.
• There were about 5,000 persons acquiring the services a year with the satisfaction rate is about 95%
• SMEs can access through many channels such as walk-in, booth exhibition, web board, speakers in seminar an workshop, Call Center (40,000 Calls a year)
Business Matching SME Shop Channel G to G Network
Marketing and Business linkage Promotion
Business Matching
• Recruiting alliances, business matching, creating network for SMEs by surveying the markets, studying the market conditions, and the needs of new markets in foreign countries
• Analyze the group of Thai products that shall be popular in the new market, and creating the good relationship in order to be the basis for connection for SMEs entrepreneurs in Thailand
• Targeted countries are Africa, China, Italy, Malaysia,etc.
• There are about 690 entrepreneurs participating in the events
SMEs Shop Channel
• Promoting SMEs entrepreneurs and OTOP entrepreneurs to obtain the market incubation via home shopping channel in order to increase the marketing channeld and expand the customer base
• It is operated by renting one TV channel for SMEs Shop Channel for 24-hour TV show and manufcturing TV and electronis media for TV program about the recommendation of SMEs or OTOP products and about stories, news and information
• Opening the call center via telephone number in order to order the proucts via e-commerce and by preparing the advertising and public relations
SMEs Shop Channel (Continued)
• 47 chapters of short stories were produced
• 296 chapters of short stories were disseminated
• 113 new chapters of SMEs/OTOP products and disseminated 660 chapters
• The channel produced 270 chapters of marketing channel promotion program for SMEs/OTOP products and disseminated news, information, and several activities for 500 times
• Promoted the innovative knowledge via arranging the seminar for 7 times
• There were 40,908 visitors into the website
• The sales volume was over 30 million baht
G to G network
• Thai representative in SMEs international
cooperation at all levels such as International Small
Business Congress, APEC SMEs, Bilateral framework,
Thai-France, Italian desk, ASEAN SMEs, the Japan-
Thailand Economic Partnership Agreement in SMEs
(JTEPA-SMEs), etc.
SME@Click
Information Technology Development and Transfer
OSMEP e-Projects/ SME@Click
SME Portal
Virtual Coach
E-Mentor Digital University
E-Biz Net E-Market Place
E- Innovation
Business setup
coaching &franchise simulation
E mentoring & consulting
E self learning tool
E marketing information
service
Online catalog service
R&D information
& SME researcher matching
Business Startup
Business Improvement
Business Expansion
Business Maturity
SME University / e-SMEs University
Incubation Center
Advisory Services
Pro
duct
&
Ser
vice
Dev
elop
men
t
Bus
ines
sD
evel
opm
ent
Tech
nolo
gyD
evel
opm
ent
(Com
petit
iven
ess)
Exp
ort M
arke
t
Dev
elop
men
t
Financial Support
SeedFund
ConsultancyFund
Intellectual Property, Internationalization F.
Stren
gth
en S
ME
MonitoringSystem
Venture CapitalFund
Later Stages
Expansion
SM
E Early Stage Growth Stage
Implementation Tools
MachineFund
Machine Fund Capacity Building Fund Venture Capital Fund
Financial Support
up to
Machine
Fund
MAIN CONDITIONS
OSMEP subsidizes 3% loan interest/yr. for 5 yrs.
Thai German Institute (TGI) is a major agency in technicalanalysis and evaluation (fee = 10,000 Baht)
Financial Institution will consider loan approval.
Supporting Industrial
DevelopmentModification/Replacement
SystemInstallation
ICTApplicatio
n
Machine
Fund
Machine
Fund
Loan ApprovalProcess
TechnicalAnalysis
ByFGI team
3 % Subsidyfor
5 years
Apply
Apply
Apply
Apply
up to
Baht
Capacity
Building
Fund
MAIN OBJECTIVES
To support SMEs in developing business in such areas as management, IP, and marketing
To enhance SMEs capabilities and standards to increase opportunities in the international market.
To add value to SMEs businesses, products and services.
MAIN CONDITIONS
Is a financial support given in form of a grant.
The maximum subsidy is 50 % of the related expenses and not exceeding 500,000 THB. per enterprise.
Consultancy Fund
Intellectual Property Fund
Internationalization Fund
Capacity
Building
Fund
Consultancy Fund
OBJECTIVES
It is a financial support for SMEs consultancy on business system development, product/service
development. Moreover, it supports SMEs that face entrepreneurial
problems in management, accounting, financing and so on. CONDITIONS
Stage 1 Business Diagnosis Process Maximum 25,000 THB. within Bangkok and vinicity .
Maximum 35,000 THB. in other provinces.
Stage 2 Consulting Process The subsidy is 50% of the related consulting expenses and not exceeding 250,000 THB.
Capacity
Building
Fund
Consultancy Fund
ReimbursementSubsidy Process
Intellectual Property Fund
Capacity
Building
Fund
The Maximum Subsidy 50 %The Maximum Amount 500,000 THB.
Reimbursement
Intellectual Property Fund
It is a financial support for SMEs in intellectual property registration
both domestically and internationally as well as in
acquiring licenses and buying from local IP owners.
OBJECTIVES
CONDITIONS
Subsidy Process
IP Fund
IP Registration
Domestic
Acquiring Licenses Buying IP
InternationalDomestic Domestic
Internationalization Fund
Capacity
Building
Fund
Internationalization Fund
The Maximum Subsidy 50 %The Maximum Amount 250,000 THB.
Reimbursement
It is a financial support for SMEs in the internationalization process, which involves participation in
international level both domestic and foreign trade fairs, business matching, market research and
survey.
OBJECTIVES
CONDITIONS
Subsidy Process
Internationalization Fund
Business MatchingInternational Trade Fairs
Market Researchand Survey
Venture Capital Fund
Unit Holders
Investment Committee
SET committee
capital capital
Capital gain
Dividend & Capital gain
tax exemption
SMEs
VCF
Fund
Manager
Capital gain
dividend dividend
Financial
institute
VCF conceptual frameworkVCF conceptual framework
Corporate
investors
General
investors
Jul 22, 03 : CabinetVCF conceptual framework
Investment committee
(Chair by Dr. Somkid)
approved
OSMEP VCF BackgroundOSMEP VCF Background
appointed
Aug 14, 03 : IC appointedSub-investment committee
Dec 23, 03 : Cabinetapprove
d Allocated Bht. 2,000 mil.
(USD 57.1 mil.)
Fiscal 04 : Cabinetapprove
d Allocated Bht. 500 mil.
(USD 14.3 mil.)
Venture Capital Fund (VCF)Venture Capital Fund (VCF)
- Provide equity Provide equity financing to financing to targeted SMEstargeted SMEs- In charge of a - In charge of a shareholdersshareholders- Support for Support for enhancing enhancing SMEs strengthenSMEs strengthen
-- Raise capital for potential SMEsRaise capital for potential SMEs
- Reduce debt to equity ratio of SMEs - Reduce debt to equity ratio of SMEs
-- Develop a better working systemDevelop a better working system
- To promote good corporate governance / To promote good corporate governance / transparencytransparency
-- Encourage creativity in private sectorsEncourage creativity in private sectors
Objectives of OSMED VCFObjectives of OSMED VCF
- Enhance / strengthen capital market- Enhance / strengthen capital market
Equity / Debt FinancingEquity / Debt Financing
VentureVenture CapitalCapital
No interest
payment
Feasibility study
based approach
Partnership
Mentorship
system/consultant
LoansLoans
Interest payment
Collateral based
Approach
Creditor
No mentorship
system
Stage of development of entrepreneurial firms
Seed Start up Early growth Growth
Leve
l of
inve
stm
ent
risk
Low
Med
ium
Hig
h
Founder&Family
Private VCF
Commercial Bank
Capital Market
OSMEP – VCF
Non-financial Corporation
OSMEP VC fund fills an important gap in start OSMEP VC fund fills an important gap in start up & early growth processup & early growth process
Investment Strategic MapInvestment Strategic Map
Stage of development of entrepreneurial firms
Expansion Mezzanine
Level of
str
en
gth
en
Low
Med
ium
Hig
h
Portfolio 40%
- Creativity
- Properly Potential
- Listed within 5 years
- Skill based
- SMEs strategic
- SMEs strategic group
- Differentiation / Value added
Portfolio 40%
- Differentiation / Value added
Portfolio 20%
- SMEs strategic
- High financial return
- Listed within 3 years
- Creativity / innovation
- Differentiation
- Skill based
- Potential
- Buy back
Start up
- High potential
- Fair financial return
Characteristic of prospect
Creativity/Innovation/Differentiation
Knowledge Based
Skill basedImport
SubstitutionExport
Oriented
Fashion& design
Food &herbs
Automotive
Tourism & Spa
Energy / Nano Tech
Energy Saving
Gov.policy
Software & IT
Manufacturing + Commercial + Services
SMEs SMEs
Management MechanismManagement Mechanism
Investment committee
Banks Alliance
SMEsMentorship Shindan-shi
OSMEP
Buy back
OSMEP executive committee
mai / SET New investors
Enterprises “Company limited”
Status Classified as SMEs by MOI
Investment 1 – 7 Years
AmountBht. 1 – 100 mil. (USD 28,570 – 2,857,000)
% of share 25 – 35% of registered capital
Buying Par / Book Value / IC decision
SellingCapital market / By back / New investors
Supporting Consult / Mentor / Expert
Investment conditionsInvestment conditions
Investment Approval Investment Approval PrecedurePrecedure
Business plan preparation
Site visit
Feasibility study
Due diligence
Approval by IC
Legal / paid up
OSMEP
Investment committee
4 week
ResponsibilityResponsibility PeriodPeriod
OSMEP 5 week
2 weeks
ConditionsConditions
- Exit strategies : listed / buy back / new Exit strategies : listed / buy back / new
investorsinvestors
- Mentorship system : consultant / Mentorship system : consultant /
coordinator / monitor etc.coordinator / monitor etc.
- Lack of venture capital knowledge and- Lack of venture capital knowledge and understandingunderstanding
- Negative attitude due to external partners- Negative attitude due to external partners
- No business plan- No business plan- Inadequate good corporate governance & Inadequate good corporate governance & transparencytransparency
ProblemsProblems
SMEs area :SMEs area :
- limited accessibility to IT and low technology- limited accessibility to IT and low technology
- limited source of funds- limited source of funds
ProblemsProblems
- SMEs scale does not attractive venture SMEs scale does not attractive venture capitalist to invest in the firmscapitalist to invest in the firms
- The VC regulation (judged by gov.) do The VC regulation (judged by gov.) do inadequate motivate new comers in inadequate motivate new comers in venture capital marketventure capital market
Venture capitalist area :Venture capitalist area :
Mentorship
Evaluation systemEvaluation system
Venture Capital FundVenture Capital Fund
Shindan
Consulting Monitoring
-- Seminar / Work shop Seminar / Work shop
How to approach SMEs How to approach SMEs
-- Focus Group Focus Group
- Linkage to the both of gov. and private Linkage to the both of gov. and private
SMEs organization for integrated SMEs organization for integrated
supporting due to SMEssupporting due to SMEs
MAI / SET
Source of
fund
Market
opportunity
Business
network
Image
Development
Mentorship
SMEs
Benefits to SMEsBenefits to SMEs
Thank You for Your Attention
www.sme.go.th
