The Vibrant Start-Up Ecosystem in Vietnam
Vietnam’s start-up landscape has witnessed a remarkable transformation in recent years, showcasing the country’s rapid ascent within Southeast Asia’s tech-driven economy. By jumping from fifth to third place among the most active start-up ecosystems in the six largest ASEAN economies, Vietnam has positioned itself as a burgeoning hub of innovation and investment, trailing only Indonesia and Singapore.
Significant Growth in Investment
The Vietnam Tech Investment Report, released by Singapore-based Cento Ventures alongside Vietnam’s ESP Capital, highlights that Vietnamese start-ups raised a significant total of $246 million during the first half of 2019. This influx of funding demonstrates a staggering six-fold increase compared to the same period in 2017. The three largest investments—Tiki, VNPay, and VNG—accounted for 63% of the total funding, underscoring the dominance of a few key players in the market.
Dominance of Digital Economy Sectors
The report emphasizes that essential sectors of the digital economy, notably retail and payment solutions, captured nearly 60% of total investments. With the rise of multi-vertical companies—diversified businesses that span various sectors—there’s seen a 12% share of capital. Emerging sectors like fintech, real estate, and logistics, though still nascent, collectively garnered 10% of investments, indicating that Vietnam’s start-up ecosystem is diversifying rapidly.
The Rise of Massive Funding Rounds
2018 and 2019 marked a pivotal moment for Vietnamese start-ups, as numerous firms began successfully securing funding rounds between $50 million and $100 million. This shift suggests a growing confidence in the local market, with potential to push more Vietnamese companies closer to substantial valuations of $500 million and even $1 billion in the future.
The Role of Foreign Investors
During 2017 and 2018, much of the investment influx was attributed to Singaporean and Japanese investors. However, a notable shift occurred in 2019, with Korean venture capital firms emerging as significant players in the investment landscape, participating in nearly 30% of all deals. This year also saw local investors becoming more active, engaging in about 36% of all transactions. The increase in the number of deals—from 13 in the first half of 2018 to 21 in 2019—highlights the heightened investor interest in Vietnam’s start-ups.
Corporate Involvement in Start-Up Growth
Major corporations in Vietnam are actively participating in the start-up ecosystem, providing not just funding but also support and infrastructure. For instance, FPT has consistently backed local start-ups through investment initiatives. Last year, Vingroup established a corporate ventures capital initiative, joining other notable corporations like Masan and VietjetAir, which are considering similar paths. Banks, including VPBank and TPBank, have also introduced preferential lending programs tailored for start-ups, enhancing financial accessibility.
Supportive Infrastructure and Events
Infrastructure support is crucial for nurturing the start-up culture in Vietnam. Companies like UP Coworking offer free facilities for qualifying start-ups, promoting collaborative work environments. The state-owned Viettel has been instrumental in fostering innovation through various sponsored events, such as Viet Challenge, IOT Hackathon, and the Viettel Advanced Solution Track. These initiatives aim to stimulate creativity and connectivity within Vietnam’s tech community.
Future Projections and Trends
The investment trends in Vietnam closely parallel those of other Southeast Asian markets. Online retail indicates substantial appeal, continuously drawing considerable funding. Sectors such as financial services, real estate, and logistics are gradually finding their footing, capturing investor interest. As mature digital companies evolve and expand outside their core business areas, multi-vertical companies are anticipated to attract an increasing share of future funding.
Despite similarities, there are notable distinctions within the market. For example, the education sector in Vietnam stands out as one of the better-funded avenues, while payment firms dominate the fintech arena, reflecting the country’s ongoing efforts to enhance its digital payment infrastructure.
As the vibrant start-up ecosystem in Vietnam continues to evolve, these dynamics will likely become even more pronounced, shaping the future landscape of innovation and entrepreneurship in the region.