Next decade to see stronger capital flows to Vietnamese tech startups

As new and disruptive technology drives change and enables the ASEAN marketplace, Maybank Kim Eng Group believes that Vietnam’s tech startups will attract big-name investors from the region, mostly from within the ASEAN and China.

“New technology in Vietnam, similar to ASEAN markets, is still in the early stages of development. The next decade will be the period of exponential growth for tech companies, propelling the boom of related industries such as logistics,” said John Chong, CEO of Maybank Kim Eng Group, during the Invest ASEAN 2018 conference in Singapore today.

According to the group, investors are excited about this growth potential and they are now shifting to the ASEAN from China and India.

Chong told VIR that overseas investors pay strong attention to the region, particularly Vietnam, despite rising protectionist policies from developed markets such as the US.

"From what we have seen, investors are driven by the fast growth rates of ASEAN countries, which average 5 to 6 per cent per year, the young population, and high penetration of Internet connection," he said.

The capital for these deals mostly came from China and the ASEAN. Recent examples in Vietnam include JD.com’s investment in e-commerce firm Tiki in January and Central Group’s buyout of Zalora Vietnam in 2016.

Statistics from Maybank Kim Eng show that funding to ASEAN tech startups has surged in the last two years. In the first eight months of 2017, disclosed equity funding for the startups was around $6.5 billion, double the $3.1 billion of 2016 despite the lower number of deals.

Major deals in the region are Alibaba’s $4-billion investment into Lazada; Tencent, Temasek, and Google pouring $1.2 billion into Indonesian ride-hailing app Go-jek or JD.com putting $500 million into Thai fintech startup Tokopedia.

“This is a very exciting time for the ASEAN as the young population is energetic and is becoming increasingly tech-savvy. We are studying at least twelve Vietnamese startups in fintech, consumer finance, and e-commerce to decide which one to invest in,” said Justin Hall, partner at Golden Gates Ventures. Golden Gates currently has three investments in Vietnam: Appota, Lozi.vn, and Wifi Chua.

Google and Temasek estimate that the Internet economy in the ASEAN will reach $200 billion in 2025, a six-fold growth every year. In particular, the e-commerce sector will take up at least $5 billion, presenting fresh opportunities for investors and startups.

Invest ASEAN is an annual conference held by Maybank Kim Eng Group in Singapore since 2013. This year, the event attracted 900 delegates from 132 funds around the globe, with the total amount of $16.3 trillion of assets under management. About 57 leading corporates from the region also joined to meet with investors, including five firms from Vietnam.

Major topics at this year’s event include artificial intelligence, venture capital, and global macroeconomics updates.

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