Angels find their calling in tech startup incubator

January 04, 2018 | 08:00
The enthusiasm and passion for business found in much of the local youth could make Vietnam a future incubator for startups. Is this enough for the country to build up its own Silicon Valley?
MoST’s startup engine is seeking to give local startups the investment boost they need

The seven-storey building of the Ministry of Science and Technology’s National Agency for Science and Technology Information lies at the end of Hanoi’s Ly Thuong Kiet street looking shabby, in need of renovation after decades of neglect.

However, on the building’s top floor sits a large incubator for those turning their novel ideas into brilliant business. The floor greets visitors with a banner reading “Welcome to the home of angels”, running along the upward staircase.

Here you will find the base of Can Thi Thanh Hien’s startup enterprise. Hien, only 22, is the co-founder of Fresh Deli, a firm established in September 2016, operating with only five team members.

Fresh Deli uses an app to connect itself with its customers and stay-at-home cooks for lunchtime meals.

“We make different menus and send them to housewives, who in turn use fresh ingredients to cook homemade lunch meals according to the menus. Then our staff will deliver the portions directly to customers,” Hien told VIR. “We pay the housewives for their work.”

Fresh Deli has already been recognised for their unique efforts. The startup received an investment of $20,000 by the Vietnam Silicon Valley Accelerator (VSVA), which implements the Vietnam Silicon Valley (VSV) project initiated by the government and the Ministry of Science and Technology (MoST) in 2013.

Developing ideas into businesses

Initially, when Hien was studying at university, she thought about creating a company that uses software to provide fresh lunches to office employees.

This early idea snowballed, leading Hien and a friend to establish Fresh Deli. Such a novel idea, a rarity among local firms, won her First Prize at the 2017 US Ambassador’s Entrepreneurship Challenge launched early this year.

Currently the Fresh Deli app has about 3,000 users, 50 cooks, and a solid team of delivery drivers. Its monthly revenue is VND100 million ($4,545).

Tran Hoang Thang, VSVA’s accelerator programme manager, told VIR that Fresh Deli is among the 50 startups that VSV has successfully invested in since the accelerator programme was established in 2014.

When it comes to high-tech breakthroughs, Silicon Valley has long been the dominant model for the rest of the world. Following the lead of China, Japan, and the ‘Asian tigers’, the government and MoST launched the ambitious VSV in 2014.

VSV seeks to create an ecosystem of innovation and technology commercialisation within Vietnam by combining the local entrepreneurial spirit with the most successful practices that the US has to offer in startup development and mentoring, accelerators, and venture capital funding and investment.

VSV annually raises funds from angel investors to invest in batches of early-stage startups in Vietnam. Each batch will include eight to 20 startups, and each startup will receive $10,000 to $20,000.

From 2014 to 2017, VSV has invested in 50 startups operating across a variety of sectors such as IT, logistics, drone technology, and foodstuffs.

Many of the startups aided by VSV have successfully achieved the next round of investment with multi-million US dollar valuations, such as TechElite, Lozi, SchoolBus, and Ship60.

In 2014, student Nguyen Hoang Trung and friends established, a page for food and foodies. Right after the launch, the page attracted around 5,000 users. After 12 months, the figure rose to 200,000 users, while the website traffic also saw an increase from 500,000 to over two million views per month. also received a VSV investment of $10,000. Currently, the website’s monthly revenue is about $10,000.

In 2015, inked a $500,000 venture capital agreement with Golden Gate Ventures in Singapore and DesignOne Japan, which both value the page at $2 million.

Journey to Silicon Valley

The Ministry of Planning and Investment is seeking comment and feedback from enterprises for a governmental draft decree on details for investment in innovative startups.

Under the draft, individual investors can establish startup investment firms and funds only when they have an average income of at least VND200 million ($9,000) – measured during the last two consecutive years from their application.

Alternatively, they can also set up these funds and firms if they have total assets of at least VND500 million ($22,727), excluding debts.

For organisations, they must have total assets in their financial report of at least VND1 billion ($45,454) within the latest year of operation.

Investors with innovative startup investment funds can invest into startups with a capital capacity not exceeding 50 per cent of the startups’ charter capital.

“Everyone is talking about startups now, and many people are trying to do something as a startup,” Dang Xuan Truong, founder and CEO of Hachi Vietnam, told VIR. “Funds and companies are paying attention to not only the development of startups, but they are interested in investing in them as well.”

Hachi provides IT solutions for farmers to help them manage their agricultural activities via their smartphones.

“With investment from VSV, I have weathered several difficulties by gradually expanding my customer base with higher-quality products. As such, my revenue from selling vegetables is about $5,000 for 1,000 square metres,” Truong said.

Currently Hachi has several vegetable farms covering more than 20,000sq.m and employing over 100 farmers.

In a bid to support Vietnam’s startup ecosystem, various sites across the nation have developed models to assist these newly-established businesses. For example, in Ho Chi Minh City, a $38.5 million, 52-hectare Saigon Silicon Valley was created based on the same model in the US.

This centre aims to attract overseas Vietnamese firms and corporations in high-tech and supporting industries, research, innovation, and transfer applications.

Recently, an advanced-tech startup cluster was also established in the central city of Danang.

Truong Ly Hoang Phi, CEO of the Business Startup Support Centre in Ho Chi Minh City, said that many investors see Vietnam as a location of great potential for developing startups and venture funds due to the innovative nature of its people.

Phi is also a founder of the Ho Chi Minh City Startup and Innovation Fund (HSIF), which has mobilised investment capital from several investors. HSIF was launched in May 2016 with an initial sum of VND30 billion ($1.36 million) in investment capital. It is expected that the figure will rise to about VND50 billion ($2.27 million) in 2017, and VND100 billion ($4.54 million) in 2020. This capital will be invested into startups in Vietnam.

However, Thang of VSVA said that despite great zeal and passion from entrepreneurs like Hien, Huy, Truong, and hundreds of others, Vietnam’s startup ecosystem remains in its infancy and has limited resources. For one, there is a significant lack of co-working spaces and startup programmes.

“In order to further the domestic startup ecosystem, and for Vietnam to develop its own Silicon Valley, the government would need to do much more – especially in terms of policies and incentives,” he said. “Currently, Vietnam may be considered an incubator, full of potential for startups.”

VSVA is currently planning its next call for investments from local and foreign funds, expecting to raise an estimate of $30-50 million for startups.

Fresh Deli’s Hien also dreams about further expanding her firm’s business.

“We are planning to turn each of our cooks into an individual distributor by launching another multi-functional app,” Hien said. “We are seeking further investment capital, and trying to increase our number of users from the existing 3,000 to 10,000 by late 2018.”

According to Hien, while government investments and incentives are important, “you will find greater success if you go beyond such support, and firmly stand on your own two feet”.

VSVA’s Thang said, “We are eager to develop and stand ready to invest in any startups with innovative and realistic ideas. Welcome to the home of angels!”

By Thanh Tung

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