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Who is Leading Thailand's FoodTech Innovation? Inside SPACE-F’s Startup Accelerator

May Jang

September 10, 2024

SPACE-F: Driving FoodTech Startup Innovation in Thailand, the World's Kitchen

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Thailand, long renowned as the ‘World's Kitchen’, is now emerging as a hotbed for food technology innovation. The country's food tech and agri-tech industries are experiencing a dynamic growth phase, driven by a combination of government initiatives, corporate partnerships, and entrepreneurial spirit.

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At the forefront of this revolution is SPACE-F, Thailand's first global food tech startup incubator and accelerator.

SPACE-F was established through collaboration between Thai Union Group, the National Innovation Agency of Thailand and Mahidol University, and it is playing a pivotal role in this transformation. By bringing together promising entrepreneurs, corporations, and investors, SPACE-F is fostering an ecosystem that empowers startups to scale up their food tech innovations and succeed on a global scale.

We met Dr. Chris Aurand, Open Innovation Leader at Thai Union Group to get to know more about SPACE-F.

He has been in the open innovation space for the last 8 years in Thailand driving new collaborations by working with startups and moved to Thai Union Group to lead their open innovation strategy which includes SPACE-F. Having strength connecting the dots between the tech from different industries and leverage the business cases around that, he’s currently a member of the working team and operational committee.

“How does SPACE-F operate? Which startups are they fostering? How does it make good domestic and international partnership? Which startups has it fostered? What’s the Thailand food tech ecosystem like? What kind of role does SPACE-F play in the Thailand entrepreneurial ecosystem?”

We explored how SPACE-F functions as both an incubator and accelerator, how it collaborates with its partners, and what the program, curriculum, and mentorship offerings look like. Additionally, we discussed what the Thailand food tech ecosystem is like as well.

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How Does a FoodTech Incubator and Accelerator Operate

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Q. Could you introduce SPACE-F for our readers?

SPACE-F is Thailand's first dedicated global food tech incubator and accelerator program. We were established by Thai Union Group, National Innovation Agency and Mahidol University to help grow Thailand’s food tech startups base.

Thailand is the kitchen of the world with 9,000 food processing companies. However, when we started off, there were very few innovative food tech, deep tech startups in the space. So we are looking at how we can really help them to grow. I believe we have been successful in doing just that over the last 5 years.

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Q. Why was SPACE-F founded, and how do the three entities participate in it?

In 2019, the National Innovation Agency released the first map of the overall startup ecosystem of Thailand.

We found that there were only a handful of food startups. At the time, there were a lot of accelerators in logistics, fintech and digital space, but not many in the food space. So the questions arose:

“Why don’t we have more innovators in food tech and agriculture tech? How can we grow that?”

That’s where Thai Union Group, Mahidol University and the National Innovation Agency of Thailand each bring their unique strengths to the collaboration, leveraging the triple helix strategy. The triple helix model of innovation refers to a set of interactions between academia (the university), industry and government, to foster economic and social development.

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We are working well together while managing expectations of all collaboration partners to create a win for everyone. The National Innovation Agency, the government supports startups through grants and the visas. Mahidol University helps the food tech and deep tech startups to evaluate their technologies, and ensures the science behind the product is sound. Additionally, they help provide the workforce that can join the startups.

On the other hand, Thai Union Group brings a global perspective on how to scale products, test products under commercial scenarios to achieve a market fit. Thai Union Group is one of the largest seafood producers and exporters with a commitment to sustainability and innovation in the seafood industry. We work closely with food tech startups on their business cases and regulatory issues, which are vital in the food tech space when looking globally, and testing their products in real-world situations.

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Q. Could you provide more details about the role of Thai Union Group in this triple helix?

We look at how we can support each startup as they enter the program. What they really want and need from our program, and how they can grow here by delivering relevant solutions are all aspects we take into consideration.

In this context, as startups have similar challenges as they grow but they also face unique problems, we try to understand their challenges and connect them to the right people.

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One example would be understanding the regulatory. There was a company producing insects for food ingredients that wanted to produce in Thailand that used a species of insect which is not allowed by regulations in Thailand. In this case, we raised the question of how they could change the process or apply for regulatory approval to bring that insect (which would take a considerable amount of time). We suggested for them to consider changing to a different insect, and if not, we discussed how to move forward.

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Q. How many startups have you invested in until now?

Currently, SPACE-F is an equity free program, where we provide a grant to each startup. It’s not a huge amount but startups figure out how to make the best out of it and be successful in the program.

SPACE-F has incubated and accelerated 80 startups. Each cohort has 10 incubator startups and 10 accelerator startups. With each cohort we may have a few startups drop out of the program.

During the program we connect startups with relevant investors, for example in our 4th cohort the startups were able to raise $3.5 Million USD. As we are engaging with the startups throughout the program, Thai Union has a clear understanding of the most investable startups that are a strategic fit for us. Thai Union Group has invested into 4 startups from SPACE-F.

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SPACE-F’s Entrepreneurial Program, Startups Fostered and Partnership

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Q. What are the standards to select the batch startups? Could you tell me about the incubator track first?

We look at startups that are interested in the Thailand and Southeast Asia markets. The startups should be ready to grow with a minimum viable product (MVP) so they can approach investors and showcase their product. Usually, they are pre-seed to seed, which means they generally don't have revenue yet and need to refine their business cases.

In conclusion, the incubator track judges are looking at the openness of the founders' willingness to listen to new ideas, feedback and take it into consideration for their company, or their stubbornness which can lead them not to change at all. If you can't change, the startup is likely to fail in the long term because changes in the business are necessary no matter what.

Here is a positive example of a startup with a flexible mindset: 'Alchemy Foodtech' a Singaporean company from batch 1 (Thai Union Group subsequently invested in them). We're initially focusing on low glycemic index (GI) powders added to white rice to reduce the rice’s GI, in order for people with diabetes to be able to eat white rice. However, over time, they realized that teaching people about GI is challenging as only a small set of the population understands the concept.

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Therefore, they pivoted, using their technology to focus on sugar reduction because it's a popular topic these days that's easy for the consumer to understand. Currently, they use their technology to reduce the sugar content of baked goods, beverages, and so on while maintaining the same taste and functionality.

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Q. What about the accelerator side?

As an accelerator, initially we focused on interesting technologies that we felt would be important for the businesses of our partners (technology push). But when I started, I saw that Corporate partners weren't really picking up on technology. So we shifted our process of working with corporate partners to identify their needs. We started asking them,

"What are your pain points? How do we solve those? How could we bring in technology and startups to solve that problem?"

We focused on building relationships between startups and corporate partners business units to solve problems. It's great for the startups because they have an opportunity to test their products with big companies that are sponsors of SPACE-F such as Thai Union Group, Thai Bev, Lotte Fine Chemicals and Nestlé.

We source startups for the program based on the partner’s problem statement and reach out to specific companies globally who are a good fit to work with the startup. For example, in our 4th batch, Seedling, a Malaysian startup that produces seaweed based ingredients was selected. Seadling developed new product formulations with their seaweed based ingredients for pet food with our partner.

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Q. Have you reached out to some startups as well? If so, what was the reason?

Yes, we reached out directly to an Israeli startup called ‘Ambrosia Bio’ which joined us last year. They have enzyme technology that converts sugar into allulose and it’s 600% less expensive than the traditional processes. The process of producing allulos can be expensive because the enzymes used in the process have a short lifespan but Ambrosia has unique technology to extend the lifespace of the enzymes by at least 2 months which reduces the cost significantly.

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It was not a fit for Thai Union but since Thailand is one of the largest sugar production countries globally, we brought them in and connected them to a few local sugar companies. Even though the sugar companies are not part of SPACE-F we look at how to grow the ecosystem as a whole and connect Ambrosia accordingly.

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Q. Could you explain your curriculum in detail?

We conduct an initial interview with startups and rank them based on the different categories like investability, business case, commercialization, scalability and IP. We figure out their strengths and weaknesses to determine their needs as the startup didn’t come here to take a generalized course. We create a bespoke, hands-on curriculum based on the assessment.

We have some coursework around the business canvas that is mandatory for everyone, as it helps startups clearly understand their business and identify who they need to talk to regarding their business goals.

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Q. Is there an in-depth program, too?

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Actually, we tailor the coursework. Over the last 5 years, we've found that many other accelerators don't teach startups about term sheets. As a result, startups don't know how to interpret or negotiate them, even though term sheets are crucial in deciding who would be the best partners to work with from a VC's standpoint and how well they match with the startup.

I think everyone has an understanding of their business case and strategy, but they need to learn more about finance. Thus, we teach business finance to startups in SPACE-F programs. Furthermore, we teach them how to envision a long-term plan. They learn to build their exit strategy and structure employee stock ownership plans (ESOPs) around it.

Our partner, Deloitte, will teach a course on IP strategies, accounting, tech strategy, all the practical things founders or CEOs don’t learn in school.

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Q. What’s your mentorship program like?

Startups have one core mentor, and we assign a mentor for individual topics such as legal, finance, commercialization, and scalability. We have built up a pool of 50-60 mentors over time, consisting of those who are willing and have a good fit.

We assess what the startups need and connect them to the right mentors. For example, if a startup needs a mentor that understands the beverage industry, we will connect them with a few individuals to determine who would be the best fit. We can even introduce startups to farmers, if a startup needs to try animal feed ingredients.

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Q. Would you introduce the outstanding startups in the cohorts?

In our last cohort, there was ‘Plant Origin’. They extract protein from rice and use it as an alternative friable egg product. In our current cohort, we have UniFAHS, a Thai startup that is deploying a natural, biotech solution to eliminate the use of antibiotics in the animal husbandry industry, with deployment in the poultry and aquaculture sectors.

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Q. How are you funded or sponsored to incubate and accelerate the food tech startups?

Our core operation is funded by Thai Union Group and the National Innovation Agency of Thailand with the support from Mahidol university.. We provide equity free grants to startups that are funded by corporate partners. Thai Bev, Nestle, Lotte Fine Chemical.

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Q. How do you closely work with the global partners?

We have partnered with regional and European accelerators to provide extra opportunities for our startups. We send our companies to some of their events, host webinars and so on.

For example, we have a partnership with German accelerator ‘ProVeg’ and we host webinars for their startups on how to set up the companies in Thailand and discuss trends in the Asia market, and vice versa for startups in Thailand that want to enter the European markets.

We have built this network in Southeast Asia, with partners including Impact Circle in Malaysia, ‘Innovate 360’ in Singapore, ‘FoodLand Ventures’ in Taiwan and JETRO in Japan .

We share information and knowledge. Additionally, if their startups would like to enter the Thai market, we can introduce them to the right companies to talk to or to VCs as well.

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More Openness for Thailand Food Tech Ecosystem

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Q. What is the entrepreneurial ecosystem in Thailand like?

The Thai startup ecosystem is still young but growing. From an investment standpoint, there are more and more global funds looking at Thailand, people establishing companies here and corporates are interested in the market too.

The Thai government is supporting local startups as well. The government’s funding is mostly focused on Thai startups but they are working to attract foreign startups with tax incentives, visa issuance, etc.

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Q. In your opinion, what could be the reason for Thailand to grow and attract interest from the global companies?

From a startup standpoint, Thailand is a fantastic launchpad for the Asian market as Thailand can efficiently handle production for startups in the food space. Thailand is a manufacturing hub for multinational and regional companies, providing startups the opportunity to work with these partners in entering or distributing products to the US, China, and global markets. Moreover, Thailand has a very strong reputation for food quality and food safety.

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Q. Then, what is the food tech startup ecosystem in Thailand like?

It's growing, but what I'd like to see more is the government supporting foreign startups that are based here, as that can help accelerate the overall ecosystem. We need more success stories: startups that can raise significant amounts of funding, IPO or have successful exits. These successful entrepreneurs will go on to train the next generation of entrepreneurs and fund young startups.

We are getting there, but compared to the digital space, the food and agritech space takes significantly longer to see a return on investment. I would like to say that there are many opportunities in the food and agriculture space too because food is essential. Now with climate change impacting us we need to put money into technologies that will support the next generation. We need patience, but the important thing is that if you don’t have food, it doesn’t matter how many digital platforms you have.

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Q. What do you think the Thai entrepreneurial ecosystem needs to grow even more?

Being more open and encouraging to local and foreign startups in Thailand is the most significant factor. We must come together and support the growth of the ecosystem as a whole as we all have a role to play. I think if Thai entrepreneurs are more risk-taking and have a global mindset, they will scale rapidly with multiple large markets on our doorstep.

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Q. What kind of advice would you give for the early stage entrepreneurs in Thailand?

There are four pieces of advice I would like to mention:

Be open. Every founder claims they are the only one doing what they are doing. However, reality is you are likely not the only one doing what you are doing. A founder needs to continuously think about how they can differentiate and protect what they are building.
Keep it simple. If you're talking to tech focused VC’s, you can likely go deeper into your technology and science. However, most investors are financial experts or marketers. Thus, instead of telling them how your technology improves protein folding, or alter the gut microbiome, tell the investor about your product in simple, understandable terms.
Go out to talk to the customers to understand them. In the agriculture technology space, startups say they have amazing solutions for farmers, but often they haven't actually gone out to talk to the farmers. Do not make assumptions about your end customer especially in new markets as each country will have its own nuances
Network. Every entrepreneur has gone through similar problems as you. So meet them and share your problems with them to find solutions. They are often willing to help. Go to startup events and conferences, and talk to people.

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Q. Could you tell us your goal?

Our short-term goal is to keep growing with partnerships across the region and globe. We have been successful in building a robust partner network to support the startups who want to go global thus far. For example, if you want to enter Korea, you can talk to our partners Y&Archer or Lotte Fine Chemicals. So we would love to grow our partnerships to connect startups to the companies, VCs and so on.

Our long-term goal is for our startups to have some successful exits. Additionally, we will continue to grow with new partners and build the food tech network across Southeast Asia.

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Written by May Jang

UNDERDOGS ORIGINALS

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