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Vietnam's Startup Scene Goes From Regional Laggard to Leader

Vietnam has transformed its startup ecosystem from the second-least active to the third-most active among ASEAN countries, trailing only Indonesia and Singapore.

According to data from the International Trade Center, Vietnam has long been one of the world’s factories, acting as a major manufacturer for the world’s top innovators, including Samsung, LG Electronics, Panasonic and Toshiba. Revenue from electronics exports amounted to US$38 billion in 2018, putting the country among the 12 biggest electronic producers and exporters.

Meanwhile, Vietnam’s local start-ups have attracted investment worth millions of dollars from across Asia and beyond. Though only four years old, the ecosystem has passed the first stage of activation and now is rapidly developing.

In 2017, there were 3,000 startups here, one-third of which were based on technology, while the rest were consumer-based. At that time, 92 startups had received investment worth US$291 million. In 2019, Vietnam’s startups lured investments of US$246 million just in the first half of the year, according to Vietnam Tech Investment Report. The report also showed that from 2017 to 2019, the investment value and the number of technology deals increased six times. The three largest investments were in Tiki, VNPay and VNG, which captured 63% of the funding.

Investors are also diversifying. If the majority of deals were from Singapore and Japan in 2017-2018, the most active investors, with participation in about 30% of the deals, are South Korean venture capitalists, many of which have invested in Vietnamese startups for the first time. Local investors are also active, participating in 36% of deals.

According to the Telegraph, the US-China trade war has redirected huge amounts of foreign investment into Vietnam. Moreover, the establishment of the ASEAN Economic Community, along with an increased presence of global tech corporations, seemingly encouraged more major investments into startups in Vietnam. In 2016, Goldman Sachs and Standard Chartered Bank successfully invested US$28 million in Vietnamese e-payment operator Momo.

Besides external factors, the government’s pro-startup policies are an asset for the current development of the ecosystem as well.

In 2016, Prime Minister Nguyen Xuan Phuc approved the Supporting National Innovative Start-up Ecosystem to 2025 Project, also known as Project 844, aimed at establishing a legal system and national e-portal for startups by 2020, while also funding 200 startups. In January 2018, the Law on Support for Small and Medium-Sized Enterprises came into force. According to Vietnam News, this provided startups with various support measures in areas,such as technology transfers, training, trade promotion, investment, preferential loans, etc.

Local governments in big cities also play an active role in promoting the startup movement. Officials in Hanoi plan to support 500 creative startup projects both legally and financially. In March, a startup incubation program was launched in the capital to provide potential startups with capital, training and market access.

In August, the Ho Chi Minh City Department of Science and Technology and Creative HQ, a start-up incubator from New Zealand, signed an agreement to cooperate in start-up promotion. Creative HQ will share experience to help the southern hub to advance its entrepreneurship ecosystem by building successful models, a suitable legal framework to facilitate public-private cooperation, and training programs for experts to optimize public services.

As mentioned above, local enterprises are equally important investors. The Vietnam Tech Investment Report, compiled by Cento Ventures, listed major contributors to the startup ecosystem. FPT Ventures, through its accelerator and seed-stage fund, the Vietnam Innovative Startup Accelerator (VIISA), has organized intensive training for popular startups like WeFit, UrBox, WisePass and more. Last year, Vingroup launched its corporate ventures capital (CVC) arm. Other corporations like Masan and VietJetAir are considering similar initiatives, according to the report.

Major banks like VPBank and TPBank have policies supporting start-ups, such as preferential lending programs or free facilities for qualified companies.

The startup movement have also witnessed a number of key events and competitions. Viettel, the government-owned telecommunications giant, has run and sponsored events like the Viet Challenge, IOT Hackathon, and Viettel Advanced Solution Track. Just this year, the Vietnam-based Abivin project won the Startup World Cup, beating 12 other finalists from around the world.

Related Articles:

Vietnamese Lifestyle Startup WeFit Secures $1m in Funding

Overcoming a Small-Scale Mindset to Grow Startups in Vietnam

Saigon to Invest $45m in Startup Infrastructure

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