Vietnam’s Emerging Startup Ecosystem

Vietnam is quickly carving out its place in the global startup landscape, gaining ground alongside well-established hubs like Indonesia and Singapore. With notable players such as VNG, Tiki, and VNPay at the forefront, the nation has witnessed a remarkable influx of capital. In 2019 alone, Vietnamese-owned startups raised an impressive $246 million, a testament to the confidence investors have in the local entrepreneurial spirit.

The Role of Foreign Investors

Foreign investment has played a pivotal role in propelling Vietnamese startups. For instance, in February 2020, Affirma Capital invested $34 million in Sieu Viet Group—a company specializing in online recruitment. Notably, significant contributions came from powerhouse investors like Japan’s SoftBank and Singapore’s GIC, which together injected $300 million into VNPay, as reported by Vietnam Briefing. More recently, HCMC-based Kilo secured undisclosed seed funding from a consortium of global investors, including Goodwater Capital and 500 Startups Vietnam.

These investments underscore a growing interest from international capital and highlight Vietnam’s potential as a promising market for innovation.

Challenges in the COVID Era

The advent of the COVID-19 pandemic posed significant hurdles for startups as Vietnam closed its borders and imposed travel restrictions. Founders found it increasingly challenging to connect with potential investors, crucial for discussions and closing deals. Dung Hoang, from Genesia Ventures, expressed the sentiment that this difficult phase have led venture capitalists to adopt a more cautious approach to funding, making it harder for startups to secure investments.

The core dilemma many founders faced was how to turn their billion-dollar ideas into reality when funds were scarce. Experts assert that aspiring entrepreneurs must be willing to invest in their ideas personally, even if the initial amount is modest. “If you want to get into a startup journey, you should be the first one to write the check,” they advise, emphasizing commitment as a prerequisite to attracting other investors.

Emerging Trends in Funding

Despite the challenges posed by the pandemic, interest from local investors began to shift. A growing number of domestic startups are successfully attracting millions in funding, signaling a promising trend. Major corporations are increasingly collaborating with startups, recognizing that such partnerships can lead to accelerated growth by leveraging new technologies and solutions.

For instance, local B2B logistics startup EcoTruck received VND100 billion (approximately $4.3 million) in Series A funding from VNG, while the digital gifting platform Got It attracted a further $6 million from the same tech giant. In another instance, VinaCapital Ventures invested $1 million in GoStream, demonstrating an expanding willingness among local investors to back noteworthy ventures.

Government Support and Initiatives

Vietnam’s government is actively pushing to foster innovation and entrepreneurship. The Ministry of Planning and Investment aims to cultivate at least ten unicorns (startups valued at over $1 billion) by 2030. Currently, the nation boasts two unicorns: VNG Corporation and VNPay, marking significant milestones in its entrepreneurial journey.

To bolster this ecosystem, Ho Chi Minh City has approved plans to nurture 1,000 startup projects by 2025, asserting its ambition to become a Southeast Asian innovation hub. This initiative is paired with efforts to enhance infrastructure, ensuring startups can improve productivity and develop high-quality products that can compete on a global scale.

The Potential for Growth

With a market size that encourages local startups to flourish, Vietnam possesses immense potential for creating successful ventures. Robert Tran, CEO of consulting firm RBNC, highlighted the viability of Vietnam as a startup hub due to its sizable population, allowing for local market experimentation before potentially branching out internationally.

Moreover, societal shifts toward technology and innovation are evident, with the Law on Supporting Small and Medium-Sized Enterprises providing essential support to budding startups through various avenues such as technology transfer, training, and investment incentives.

Skills and Talent in the Spotlight

Eddie Thai, a partner at 500 Startups Vietnam, emphasizes the remarkable entrepreneurial talent that Vietnam possesses. He describes the country as a “30-year-old economy,” noting its resilience and rapid growth since the 1990 economic opening. This burgeoning tech scene is increasingly recognized for its skilled workforce, making the country a prime location for global investors seeking innovative solutions.

According to StartupBlink, Vietnam continues to ascend in the global startup rankings, landing 59th overall in 2020—an impressive climb of 13 spots. Cities like Hanoi and Ho Chi Minh City are also making strides, with Hanoi entering the top 200 cities globally for startups.

The Road Ahead

While the pandemic has introduced new obstacles, local startups are increasingly turning to technological advancements that are reshaping industries. With active participation from government initiatives and a burgeoning local investor base, the environment for startups in Vietnam continues to improve. This mix of local and international support is creating fertile ground for future innovations that could potentially lead the country into an exciting new era of entrepreneurship.

In summary, Vietnam stands at the cusp of a vibrant startup revolution, characterized by a burgeoning ecosystem fueled by both local talent and international investment. The outlook for the future is bright, and the path to becoming a leading global startup hub appears promising.