Vietnam’s Thriving Startup Ecosystem: A Rapidly Growing Landscape

Vietnam’s startup ecosystem has experienced an exponential rise in recent years. In 2021 alone, local businesses attracted over $1 billion in investments, with some estimates suggesting the figure could be as high as $2.4 billion. This surge in venture capital (VC) investment, especially within the tech sector, underscores the vibrant innovation occurring at all levels of the Vietnamese economy.

The transformation can largely be traced back to National Program 844, an initiative launched in 2016 by the Ministry of Science and Technology aimed at fostering rapid business growth. This program has sparked a wave of startup activity that has seen enterprises emerge at an unprecedented rate.

The Impact of Major Investments

One of the standout success stories in this booming ecosystem is MoMo, a fintech app that reached a remarkable valuation of $2 billion in late 2021. This growth not only highlights MoMo’s success but also sheds light on the immense potential that exists in Vietnam’s startup scene. Fintech companies have captured a significant share of VC funding; a staggering 70% of investments in 2021 were directed towards this sector, indicating both demand and innovation.

Source: Shutterstock

ThinkZone Fund II: Nurturing Local Talent

While Vietnam’s startup scene has attracted considerable foreign investment, primarily from Singapore, local funds are beginning to make a mark as well. A notable development is the ThinkZone Fund II, announced in February 2022 by the Hanoi-based venture capital firm ThinkZone. This fund, which has raised $60 million with partners including Phu Thai Holdings and IPA Investment Corporation, is poised to become Vietnam’s largest locally-focused fund.

The implications of ThinkZone Fund II extend beyond mere financial backing. By targeting various sectors—finance, retail, manufacturing, agritech, and food & beverage—it aims to support startups with not just capital, but also with invaluable local market access, networking opportunities, and bureaucratic insights.

Accelerators as Catalysts for Growth

Accompanying the establishment of the new fund is the ThinkZone Accelerator Batch 5, aimed at early-stage startups. This accelerator program invites applications from Vietnamese startups and offers direct investments ranging from $50,000 to $200,000. Startups selected for the program also gain access to technological support, mentoring, and a network of venture capital firms, significantly enhancing their chances of success.

Such initiatives serve as crucial building blocks for many promising companies that may not yet be ready for substantial investment but require support in refining their products and scaling operations.

Source: Gimo

Social Responsibility in Fintech Innovation

ThinkZone II has already made waves with its first significant investment in Gimo, a fintech startup focused on providing Earned Wage Access (EWA) to underbanked workers. The choice of Gimo reflects a growing trend toward socially responsible entrepreneurship within Vietnam’s startup community.

Aligned with governmental goals to enhance financial inclusion, Gimo’s mission also touches upon a vital segment of the workforce often overlooked by traditional banking systems. This shift indicates a further investment avenue where startups can drive social impact alongside economic growth.

The Future of Startup Funding

The conversation around startups in Vietnam is evolving, with increasing attention being paid to community-oriented and eco-friendly initiatives. Early-stage investment firms are recognizing that projects contributing to community development are becoming a prominent trend. This growing awareness suggests that future investments may increasingly target ventures that align economic viability with social responsibility.

With ThinkZone II casting a wide net across various industries, it’s clear that startups aiming to serve a greater societal purpose will likely find ample support. The ecosystem is poised for continued growth, serving as a fertile ground for innovative ideas that bring both economic and social value to Vietnam.

This article is part of the broader Initiative for Startup Ecosystem in Vietnam, a project aiming to create a sustainable environment for fast-growing businesses by harnessing technology, intellectual property, and innovative business models.