The amount of invested capital and the number of technology deals closed have grown six-fold from the first half of 2017 to the first half of 2019, stated the venture’s Vietnam Tech Investment Report in collaboration with ESP Capital, an early stage venture fund investing in Southeast Asia technology startups.
Source: Vietnam Tech Investment Report.
Vietnamese startups raised a total of US$246 million in the January – June period, of which, three largest investments (Tiki, VNPay, VNG) captured 63% of the funding. In terms of sector, the building blocks of the digital economy such as retail and payment captured almost 60% of the period’s investment.
According to the report, 2018 and 2019 have seen a new wave of Vietnam’s startups that raised US$50 million to $US100 million rounds for the first time. If this trend progresses, it is expected more Vietnamese companies would approach the US$0.5 billion and eventually US$1 billion valuation mark in the years to come.
In 2017-2018, the majority of deals were with Singapore and Japan-based investors. This year, Korean venture capital took the throne as one of the most active investors in the first half of 2019, having participated in almost 30% of the deals. Interestingly, many of those Korean investors invested in Vietnamese startups for the first time, stated the report.
The local investors were equally active, with participation in nearly 36% of the deals. The number of deals grew from 13 deals in the first half of 2018 to 21 deals in the same period of 2019.
Clear shift in capital and deals to Vietnam. Source: Vietnam Tech Investment Report.
Vietnam is in an important period where key components of a strong digital economy is beginning to shape up. For instance, being part of the 7% club, Vietnam is backed by a favorable economic tailwind, where a recent report by Standard Chartered predicts that Vietnam’s GDP growth pace is set to sustain at around 7% through 2020s and personal income will surpass the US$10,000 GDP per capita milestone in 2030.
Moreover, a favorable demography, where 60% are comprised of young population under 35, allows for ongoing mobile and internet penetration that will bring 10 million more consumer online by 2023. Further economic boost will also come from multiple well-funded digital companies, competing to build better commerce, payment, and logistics infrastructure.
Other contributing factors include active government support as well as increasing interests from both local and foreign investors. As these components evolve and converge, Vietnam certainly has the potential to establish itself as Southeast Asia next leading startups ecosystem.
The National Innovation Center (NIC) provides regulatory sandboxes in unregulated industries for startups to pilot new ideas. US$82 million is committed to the first NIC at Hoa Lac HiTech Park, with more centers to be set up nationwide.
Source: Vietnam Tech Investment Report.
Meanwhile, Vietnam Global Innovation Fund aims to build future Vietnamese talent pipelines via a scholarship program for Vietnamese talents to study and gain working experiences overseas.
The government not only endorses major startup-related events such as the recent Vietnam Venture Summit, with the participation of the highest-ranking government officials to have insightful discussions with key stakeholders in the startup ecosystem
Meanwhile, corporates also play an active role in Vietnam’s startup ecosystem. For example, FPT has long provided investment support to local startups. Vingroup set up its corporate venture capital (CVC) last year, while other prominent corporations such as Masan and Vietjet Air are considering similar initiatives.
Leading banks like VPBank and TPBank provide preferential lending programs for startups. VPBank and UP Coworking offer free facilities for qualified companies. Viettel, the largest Vietnamese state-owned corporations, has actively organized and sponsored numerous startup events such as Viet Challenge, IOT Hackathon, Viettel Advanced Solution Track.
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