Deal focus: Wongnai eyes expansion, then Thailand IPO

Intouch Holdings first noticed the potential of Wongnai in 2010, when the restaurant reviews website operator was one of few members of Thailand's nascent tech start-up ecosystem. At the time, however, the firm's VC arm, InVent, had yet to be established and it didn't have the ability to offer early-stage funding. As a result, it put the company on a watch list and bided its time until the moment was right.

That moment has taken the form of the biggest Intouch investment to date and the first-ever Series B round from a Thai venture capital firm for a domestic start-up. The all-local aspect of the deal is strategically crucial given the combination of Wongnai's domestically focused growth trajectory and Intouch's in-country promotional muscle.

"Our roots are Thai and we're doing well here, so for me, it doesn't make economic sense to go out of Thailand," Wongnai CEO and co-founder Yod Chinsupakul. "We stay true to that, and it matches with Intouch's intentions."

The investment exceeded Intouch's usual range of $1-2 million per company and is understood to secure the firm about a 10% stake in Wongnai. The GP's key contribution to the partnership will be access to the approximately 38 million Thai mobile subscribers related to its investment in telecom company Advanced Info Service (AIS). This potential consumer base, along with a related network of local small and medium-sized enterprises, positioned Intouch as a uniquely connected partner for a company realizing nationwide growth ambitions.

"You can't do this kind of product without localization and expertise," says Vitavin Ittipanuvat, an associate at InVent. "It's not just about putting the data online - it's about building sustainable long-term relationships with other local businesses and a trusted brand among customers. It's a two-sided challenge, which makes entry into this market tough for competitors."

Wongnai has emerged as the de facto standard app for Thais browsing online for a place to eat and claims more restaurants in its database than any of its competitors. It recently leveraged this brand recognition to expand into verticals in a number of wellness and beauty-related consumer fields.

The company offers mobile search and location-based recommendation services for more than 200,000 businesses, including restaurants, spas and salons. The number of users was estimated to exceed 2.2 million last year when Wongnai realized the roll-out of its online-to-offline (O2O) lifestyle services and e-voucher programs.

A listing on the Stock Exchange of Thailand is expected within three years, following further development of O2O programs - including possible synergies with AIS' mPay services - and expansion of the company's operational base from five to seven cities. Intouch's investment will also go towards expanding the Wongnai team from 80 to 110 employees, with an emphasis on sales and marketing staff.

"This will be the last round for us; I'm not going to look for money anymore," Chinsupakul adds. "I don't see us as a start-up anymore. We're looking to change from investing mode into a profitable and sustainable company."

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• Topics
• Southeast Asia
• Early-stage
• Technology
• Venture
• Thailand
• TMT