Big-city startups make waves in funding rounds

October 25, 2023 | 22:00

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Vietnamese startups, particularly in the largest cities, are witnessing significant international investments, reflecting the country’s rising prominence and commitment to innovation.

Hanoi-based travel startup Vntrip last week successfully completed an undisclosed new funding round, which saw participation from notable investors, including Fan Min, co-founder of Chinese multinational online travel company Ctrip, according to TechInAsia.

Prior to this recent round, Vntrip had amassed more than $20 million from renowned investors, such as John Wu, the former chief technology officer of Alibaba, Swiss private bank IHAG, and investment firm Hendale Capital.

Vntrip had also announced a merger with Atadi.vn, a platform for budget airline tickets. Moreover, following successful funding from Swiss investor IHAG Holding, the startup’s valuation soared to $45 million.

Big-city startups make waves in funding rounds

Founded in 2014, Vntrip initially sought to operate within the tourism sector of Vietnam, offering hotel booking services for individual customers. Yet, in 2018, a strategic pivot was made.

“The business travel segment, worth $2 billion in Vietnam, remained fragmented, with no company holding significant advantage,” remarked Le Dac Lam, co-founder and chairman of Vntrip.

Earlier this month, AirCity, a Vietnamese tech-driven startup specialising in building management, announced an undisclosed seed round investment from South Korean-based Sopoong Ventures.

AirCity, established in 2021, utilises tech for effective management of various properties, including rental buildings, dormitories, residential complexes, and offices.

“Our system offers comprehensive management services, allowing property owners to handle daily tasks swiftly and accurately while also lowering expenses and enhancing operations,” said Le Hoang Nhat, co-founder and CEO of AirCity.

In July, local edtech startup Vuihoc also secured an investment of $6 million in its Series A funding round, spearheaded by TNB Aura.

Other notable investors participating in the round included TKG Taekwang and IBK-STIC Pioneer Fund, as well as previous round investors such as Do Ventures, BAce Capital, and Vulpes Ventures, with TNB Aura taking the lead.

In Q2/2023, Vietnamese startups raised a total of $413 million, surpassing Indonesian startups with a total of $327 million. However, they still lagged significantly behind Singaporean startups, which garnered a whopping $1.24 billion in the same period, according to DealStreetAsia.

Deputy Chairman of Hanoi People’s Committee Le Hong Son earlier this month praised the growing dynamism of the entrepreneurial ecosystem in Hanoi, noting its substantial contribution to Vietnam’s startup scene. “Hanoi is home to approximately 1,000 innovative startups, a significant portion of the nation’s total of 3,800,” he said.

Additionally, the city boasts 32 multi-sectoral business incubators, representing 38 per cent of the country’s total. This is complemented by 14 organisations offering business accelerator programmes, which make up 40 per cent of the nation’s total.

“Looking back over recent years, Hanoi-based startups and innovative enterprises have successfully raised a cumulative sum of $1 billion across 100 funding deals since 2016. This upward trajectory in numbers year after year,” said Son. “The city has introduced a plethora of mechanisms to support the startup ecosystem.”

Transitioning focus to the south, Ho Chi Minh City is not far behind in making its mark as a nexus of startup innovation. Reflecting on the robust inflow of venture capital into Ho Chi Minh City startups, Vo Van Hoan, Vice Chairman of Ho Chi Minh City People’s Committee, emphasised the strides the city has made since 2016.

“We’ve rolled out initiatives with a clear focus on pivotal missions. We aim to supercharge research and development activities, translate research findings from academic institutions into commercial successes, and bolster both training and the overall competencies of our entrepreneurial community,” he said.

Among over 538,000 businesses thriving in the city, approximately 2,000 innovative startups emerge, accounting for a significant 0.5 per cent of local businesses. This translates to half of the nation’s entire innovative startup tally.

Hoan highlighted the city’s strategic shift towards sustainable entrepreneurial activities, noting its burgeoning appeal to investment funds.

“Our attentiveness to sustainable innovation is more than a trend. It’s a commitment,” Hoan said.

What is more, startups with a social impact footprint make up around 5-6 per cent of the total, with several carving niches in sectors like renewable energy and green transportation. Their cumulative funding in 2022 alone approached $60 million, underscoring the city’s determination to champion such initiatives.

Keen on addressing urban challenges, the city continuously promotes startups centred around environmental solutions, healthcare, and education. To bolster these efforts, the city has secured approval from the National Assembly to pilot a number of special policies for the development of the city.

Nguyen Binh Nam, Founder and CEO Opla CRM

Innovative initiatives have witnessed a surge in attention from governmental bodies, and both domestic and international innovation funds.

This transformation has translated into improved access to funding, resources, and supportive policies for startups here.

The establishment of entrepreneurial communities has ushered in direct and indirect support through the provision of knowledge, information, and financial backing. When compared to the scenario of about 3-4 years ago, startups now experience a markedly enhanced sense of inclusion and backing.

Notwithstanding these gains, government-backed innovation schemes often bear the hallmarks of procedural rigidity, falling short of delivering a profound and far-reaching impact. Support policies, as of now, are yet to showcase the level of effectiveness and influence desired. The substantial gap separating startups from the platforms meant to aid them remains a pressing concern, with these initiatives lacking in specificity.

In the context of innovation, Vietnamese startups enjoy a substantial advantage over their regional counterparts, thanks to the availability of a cost-effective IT workforce and a sprawling marketplace. Nevertheless, these advantages are still in the process of translating into tangible, measurable outcomes.

Looking ahead, I propose a thorough evaluation by government departments and agencies to gauge the real-world impact of the initiatives they have put in place. These evaluations should be conducted with diligence and depth, producing results grounded in reality.

Such assessments are vital in making the government more cognisant of the ineffectiveness inherent in certain programmes, shifting the focus from a mere report of accomplishments.

Le Hai Vu, Founder and CEO Velasboost

The government is supercharging the startup ecosystem with a suite of incentives designed to foster innovation and entrepreneurship.

For newer entrants attempting to navigate this saturated market using identical methods, they’re inevitably met with significant challenges, given limited experience and resources. Simply mirroring these established models doesn’t just stunt growth, but leaves them susceptible to overshadowing or even potential takeovers.

By introducing groundbreaking business models or refining traditional methods with avant-garde technologies, these startups can gain the agility and edge needed to stand toe-to-toe with industry giants. Specifically for Velasboost, this innovative ethos is not just a guiding principle, but the very foundation upon which our success and resilience are built.

The primary advantage for startups lies in their agility. Being smaller and less bound by rigid processes, they can seamlessly integrate innovative activities without disrupting current operations. However, the challenges are manifold. Innovation is not merely about conceptualisation; it involves skilled personnel, software systems, infrastructure, and most critically, persistent experimentation, which can be financially draining.

Given the limited budgets, startups face constraints in procuring high-quality resources. While there may be government policies to support smaller businesses, many of us in the sector aren’t adequately informed or find it hard to access such information, possibly due to a lack of unified communication channels.

To truly nurture the innovative spirit and potential of startups, regulatory bodies should prioritise the creation of more intuitive engagement channels, making full use of modern open platforms. The era of cumbersome operations and exhaustive paperwork should be left behind.

Tran Ba Thin, Co-founder and CEO PiHome

Innovation proves pivotal for startups as it leverages tech to refine or replace conventional business methodologies, bolstering efficiency. PiHome embodies this doctrine by delivering a versatile, centralised property management platform, thus propelling the digital transformation within the realm of property management.

Drawing from my 16-year involvement in tech startups and five years in the sphere of platform-based startups, I’ve had the privilege to witness the affirmative influence of the government-driven Digital Transformation and Startup Movement. This movement has wrought transformation in society and is moulding a fresh cohort of entrepreneurs. The startup ecosystem is in flux, fostering greater interconnection. The tenets of this movement are being embraced by aspiring young entrepreneurs, myself included, recalibrating our entrepreneurial mentality to be more systematic and empirical.

However, this ecosystem remains in its nascent phase, characterised by constricted accessibility, a deficit of professional infrastructure, and an insufficiency of resources. Early-stage startups necessitate substantial backing inclusive of policies, frameworks, expert networks, market trials, and foundational capital to forge minimum viable products and explore market openings. Investment at this juncture is infrequent, mandating policy-led reforms.

We propose a policy framework that resonates with the pragmatic prerequisites of active startups. This entails instituting a comprehensive funding structure that modulates support levels commensurate with a startup’s evolutionary stage. As startups advance, they should be furnished with augmented funding, encompassing pivotal infrastructure, market ingress, promotional undertakings, and accessibility to expert networks.

Startups seek the knowledge to flourish

With the venture capital market in 2022 deemed generally gloomy with total investment and number of deals falling globally, more work is to be carried out for new companies in Vietnam to survive.

Vietnamese startups raise $855 million in 2022

Vietnamese startups secured $855 million in fresh funding in 2022, which is only one-third compared to the value in 2021, according to a recent report by Nextrans.