Vietnam’s Venture Capital Boom: A 2021 Overview
In 2021, Vietnam’s venture capital (VC) landscape experienced a remarkable surge, with investments reaching an unprecedented US$1.4 billion—up 60% from the previous record of US$874 million in 2019. This rapid growth can be attributed to the maturation of the technology startup ecosystem, an uptick in later-stage investments, and increased participation from both local and foreign investors eager to capitalize on Vietnam’s burgeoning digital economy. This insight comes from a recent report by Silverhorn, detailing Vietnam as one of Southeast Asia’s emerging tiger economies thriving on venture capital.
A Leap in Deal Activity
The sheer volume of deals is equally impressive. In 2021, Vietnam recorded 165 deals, a 57% increase from 2020, signifying a vibrant and active VC marketplace. The total amount of deals surpassing US$10 million exceeded US$1.2 billion, indicating a 255% year-over-year growth. Such substantial investment reflects a maturing VC market where local startups, having successfully progressed from seed and early stages, are now attracting larger rounds at elevated valuations.
The Rise of Unicorns and Established Players
As of 2021, Vietnam boasts five unicorns alongside numerous private equity-backed enterprises. Notable players include Masan Group, VNG, MoMo, Tiki, and VNPay, highlighting the breadth of the domestic market. This emergence of unicorns is a positive indicator of the strength and potential of the Vietnamese tech ecosystem.
New Faces in the VC Landscape
Another exciting development in Vietnam’s VC market is the rise of homegrown investment firms. New entrants like Do Ventures and Ascend Vietnam Ventures have emerged, successfully raising institutional capital to target Vietnam-centric investment strategies.
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Do Ventures: Launched in 2020 with a US$50 million fund, it has attracted backing from major players, including South Korean Internet giant Naver and Singapore’s tech conglomerate Sea.
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Ascend Vietnam Ventures: This firm recently closed its first VC fund at US$64 million, aiming to channel investments into over 20 startups in the coming year.
These emerging funds complement established global and regional VC investors already active in the local scene, such as Golden Gate Ventures and top-tier Silicon Valley stakeholders like Andreessen Horowitz and Y Combinator.
M&A Activity on the Rise
The maturing tech startup scene in Vietnam is further amplified by increasing merger and acquisition (M&A) activity. Many foreign firms are acquiring local startups to penetrate the market, broaden their offerings, or enhance their user base. Notable acquisitions include Sea’s purchase of Foody in 2017 and GoJek’s acquisition of WePay in 2020.
Moreover, domestic conglomerates like Masan Group and Vingroup are pursuing their own M&A strategies, actively acquiring tech firms to bolster their market positions. Recent transactions include MoMo’s acquisitions of Nhanh.vn and Pique AI, demonstrating a robust local appetite for growth through consolidation.
Government Initiatives to Foster Growth
The Vietnamese government is actively promoting the domestic tech startup ecosystem. They have introduced tax incentives for tech companies and eased ownership regulations to attract foreign investors. Furthermore, the construction of the National Innovation Centre in Hanoi, a US$32 million initiative, aims to accelerate startup development and technological product commercialization.
Ambitious Goals for the Future
Vietnam’s ambitions reach far beyond the immediate horizon. The government aims for the digital economy to represent 20% of the nation’s GDP by 2025, an increase from 8.2% in 2021, while also targeting ten tech unicorns by 2030.
Fintech: A Leading Sector
Within the broader VC landscape, fintech has emerged as a dominant sector, accounting for over half of all VC funding in Vietnam last year. Fintech funding alone reached US$720 million in 2021, underscoring its significance in the country’s tech ecosystem.
