Chiang Mai, the largest city in Thailand’s mountainous north, is the poster child of digital nomadism. Its affordability, friendly laid-back culture and relatively high quality of life have drawn in overseas tech talent seeking to work and build self-funded businesses online.

More than a decade of in-migration has led to a bustling community of foreign entrepreneurs in Chiang Mai, including global experts in areas such as blockchain, digital marketing and search engine optimisation (SEO). 

However, this critical mass of knowledgeable digital nomads has not translated into the vibrant start-up ecosystem many locals had hoped for. Sources tell fDi that foreign entrepreneurs in Chiang Mai are generally segregated from the local business community, meaning there has been only limited knowledge transfer and opportunities created for their local counterparts.

“Chiang Mai is a supportive entrepreneurial community for indie hackers and digital nomads who are trying to build their online empire. But a lot of times I don’t see Thai people entering those communities and spaces,” says Lily Bruns, a Chiang Mai native who has helped to build and promote the start-up ecosystem since returning to her hometown in 2017. 

As locations compete globally to attract mobile, tech-savvy talent in a bid to spur local economic development, Chiang Mai provides a cautionary tale. Despite significant remote tech talent and self-funded entrepreneurs in the city, most of Thailand’s scale-ups and venture capitalists are still based in the capital Bangkok. Entrepreneurs stress that poor English language skills among locals are a major challenge. Bureaucracy and stringent visa regimes also hinder Chiang Mai’s ability to attract foreign start-ups, talent and integrate them with the local ecosystem.

Rise of digital nomads

When German serial entrepreneur Sven Ernst first travelled alone to Thailand in 2004, he fell in love with the country. He later decided to study in one of Chiang Mai’s seven universities and in 2012 opened an office in the city for Buzzwoo, the software development agency he still runs.

Back then, there was “very little” start-up activity and a virtually non-existent digital ecosystem, Mr Ernst recalls. Most foreigners living in Chiang Mai were English teachers, missionaries and non-governmental organisation workers. 

Progressively more and more remote tech workers and entrepreneurs have moved to the city since, where average monthly living costs of $1000 are significantly lower than established tech hubs. 

Nomad List, a remote working database, ranks the city as the world’s second-best place for digital nomads, behind the Thai capital Bangkok. This ranking and YouTube influencers such as Johnny FD have helped to compound Chiang Mai’s positive image. 

This narrative has acted as a “self-fulfilling prophecy” for the city to attract even more remote workers and entrepreneurs seeking a community of like-minded people, argues Eli David, the CEO of Startup Blink, a research consultancy. 

Mr Ernst, whose investors had tried to convince him to open an office in San Francisco, says Chiang Mai’s cheaper living and operating costs enable start-ups to have a much longer runway. Today, Buzzwoo has its largest of four global offices in Chiang Mai, where the majority of its 50 employees are Thai people. 

“Chiang Mai is a city with an excellent infrastructure for launching start-ups,” says Atikant Sutthiwong, an innovation counsellor at the National Innovation Agency (NIA) of Thailand, a public body. Chiang Mai is home to one of three NIA start-up hubs and has a steady stream of engineering talent from its local universities.

Abundance mentality

Weekly meet-ups about topics such as SEO, Google Ads and software development are hosted across Chiang Mai’s many coffee shops, coworking spaces and bars. A highlight of the 2023 calendar was a gathering of 800 SEO entrepreneurs held in November by Matt Diggity, a former Silicon Valley electrical engineer who moved to Chiang Mai in 2013.

Kyle Roof, an SEO entrepreneur who relocated to Chiang Mai from the US in 2020, says there is a supportive community of experienced entrepreneurs willing to share expertise: “There’s a real abundance mentality here.” 

Overseas entrepreneurs and remote workers in Chiang Mai benefit the local service-dependent economy by spending money on restaurants, accommodation and transportation. But local hopes of significant knowledge and innovation spillovers to the start-up ecosystem have fallen short of expectations.

“We feel they are quite distant,” says Cholathit Khueankaew, a Chiang Mai native and managing director of Artisan Digital, which helps build fintech and de-centralised finance businesses. He adds “it feels like we are a place where people come and go” and that the economy remains dependent on tourism and services.

Average monthly household income in Chiang Mai was less than Bt23,000 ($650) in 2021, compared to Bt40,000 in Bangkok, according to official data compiled by Knoema. 

Dave Malhotra, the Bangkok-based CEO of tech consultancy ShakeSphere who has hired software developers in Chiang Mai, says there is very skilled tech talent in the city. However, they tend to either move to Bangkok or work remotely for companies based in other Asian tech hubs, in search of higher wages.

Mr Malhotra says there is a “huge loss of opportunities” from the lack of engagement between remote workers and locals. But he believes lower English language skills in Thailand compared to other south-east Asian countries is the biggest hurdle to overcome. 

Grey area

A lack of spillover is due in part to many foreign entrepreneurs temporarily moving to Chiang Mai on 90-day tourist visas, before leaving to go to another location. Sources tell fDi that many digital nomads work in a ‘grey area’, where they run their companies from the city without paying local taxes or hiring Thai workers.

A new long-term residence visa aims to ameliorate this problem by offering digital nomads the right to stay for up to 10 years while only paying 17% tax. But many entrepreneurs are put off by stringent measures, which include earning at least $80,000 per year. Ms Bruns says that if Thailand wants to make things more collaborative they have to make visas less cumbersome.

Some entrepreneurs have been able to successfully settle due to working with Thai people, like Simon Bacher, the CEO of language learning app Ling. Mr Bacher, who is originally from Germany and married to local Kanyarat Nuchangpuek, has been able to open a local Thai company.

“We own a Thai company, but that’s pretty rare,” says Mr Bacher, who notes that there is “not that much” support or ability to raise money for foreign start-ups. For start-ups seeking to raise significant funding or grow to be a ‘unicorn’ in Thailand, entrepreneurs say it makes more sense to move to Bangkok.

However, Mr Bacher says that limited options for local developers in Chiang Mai gives companies based in the city “a huge advantage” to attract top talent. “Chiang Mai is just amazing,” he says, adding that the city provides a great quality of life.

This article first appeared in the December 2023/January 2024 print edition of fDi Intelligence 

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