Vietnam’s Thriving Tech Startup Scene: A Growing Attraction for Investors
By Thuy Tuong
Sat, July 15, 2023 | 8:25 am GMT+7
Vietnam’s technology startup ecosystem is experiencing an impressive surge, becoming a magnet for venture capital (VC) investments. Aiming for a fully digital society by 2030, the nation is laying down a robust framework to propel its digital economy.
New Ventures and Investments
One of the notable players in this landscape is South Korea-based Shinhan Venture Investment. The firm recently announced plans to bolster its investments in Southeast Asia with a newly raised $200 million global flagship fund. According to an article in Nikkei Asia, roughly 50% of this fund will be directed toward Southeast Asia, including Vietnam, while 30% will focus on the U.S. and other international markets, and 20% will remain within South Korea.
JinSoo Lee, the head of global investment at Shinhan, emphasized their sector- and stage-agnostic approach, stating, “We are focusing on Southeast Asia, especially Indonesia, Singapore, and Vietnam.” This flexibility allows the fund to engage in a diverse range of startups, from early seed investments to those preparing for Initial Public Offerings (IPOs). A distinctive advantage is the integration of their subsidiaries across banking, insurance, and credit services in different countries, allowing them to support founders significantly in scaling operations.
The fund has already finalized several deals across Southeast Asia, including investments in companies like Speedoc from Singapore, Indonesia’s aquaculture startup eFishery, and insurtech specialist Pasarpolis.
**A South Korea office of Shinhan Financial Group, the parent corporation of Shinhan Venture Investment. Photo courtesy of the group.**
Local Developments in Venture Capital
In the same vein, VinaCapital Ventures, the technology investment arm of VinaCapital Group, recently invested $1 million in Koina, an innovative agri-tech platform based in Vietnam. “Koina’s mission is to be an innovative hub in Vietnam’s agriculture sector,” stated Hoang Duc Trung, a partner at VinaCapital Ventures. The firm aims to enhance the supply chain and improve the quality of life for Vietnamese farmers, capitalizing on the government’s push for environmentally friendly agriculture.
The Vietnamese government’s strategy on digital transformation, established in 2020, forecasts that the digital economy will constitute 20% of the GDP by 2025. Enhancing digital growth is seen as a pivotal strategy toward transforming Vietnam into a high-income economy by 2045. According to the World Bank, if the digital sector continues to grow at around 10% annually, the cumulative economic benefits could surpass $200 billion between 2021 and 2045.
Support Systems for Startups
In 2021, new startup support centers were established in major cities like Hanoi, Danang, and Ho Chi Minh City, further nurturing innovation. By 2022, a roadmap was unveiled aiming to allocate 1% of GDP to scientific research and an ongoing commitment to monitor the startup ecosystem’s advancement through business innovation surveys.
The landscape for startups in Vietnam has been particularly vibrant over the past year. A recent report compiled by venture fund Do Ventures and the National Innovation Center highlighted the strong investor interest in Vietnamese startups throughout 2022. It positioned Vietnam as third in Southeast Asia for deal count and fourth in terms of deal value. Notably, domestic investors accounted for 45% of the total deal value.
Unicorns and Emerging Startups
While Vietnam trails behind Indonesia, Singapore, and the Philippines in overall investment share, the country has demonstrated robust seed-stage activity. Noteworthy sectors attracting investment include fintech, retail, healthcare, and payment solutions.
Despite a challenging investment landscape where total startup funding fell to $634 million in 2022—a drop of 56% from 2021—Vietnam saw the emergence of four unicorns: VNPay, VNG, Momo, and Sky Mavis—the latter gaining notoriety through its NFT-based game, Axie Infinity.
Additional players making waves include M Village, specializing in co-living accommodations, and TopCV, which offers tools for job-seekers to craft standout resumes. These remarkable achievements underscore Vietnam’s dynamic and evolving startup ecosystem.
Major Domestic Venture Capital Funds
According to Preqin, three significant Vietnam-focused VC funds closed their funding rounds between 2021 and 2022, marking substantial milestones in the venture capital landscape.
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AVV Alpha ($64 million): HCMC-based Ascend Vietnam Ventures launched AVV Alpha, surpassing its initial target. The fund aims to seed up to $2 million into various startups across blockchain, edtech, fintech, and more, with backing from the International Finance Corporation.
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ThinkZone Fund II ($60 million): Raised solely from Vietnamese limited partners, this fund focuses on pre-seed to Series A rounds for fintech, edtech, and e-commerce ventures within Vietnam, showcasing local resilience during challenging times.
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Do Ventures Fund I ($50 million): Supported by reputable international firms including South Korean internet leader Naver, this fund targets early-stage platforms to help traditional businesses harness digital transformation.
In summary, Vietnam’s tech startup scene is at an exhilarating juncture, marked by significant foreign interest and burgeoning local support. With the nation’s commitment to digital transformation and a thriving VC environment, the future looks promising for Vietnamese entrepreneurs and investors alike.