SaaS startups offer chance to scale up

A number of software-as-a-service (SaaS) startups and companies have wrapped up investments from venture capital funds and financiers this year, signifying the growing interest in the market.

Finviet Technology Corporation, which focuses on cashless payment apps and an online ordering platform for physical retail businesses, secured an undisclosed amount from Japan’s Sojitz Corporation at the end of April.

The same month, CNV, which offers digital transformation products and marketing growth services, also bagged $1 million in fresh funding from Wavemaker Partners.

Elsewhere, ScaleUp, a provider of e-commerce solutions similar to the SaaS model, received seed funding from the South Korean venture capital fund Nextrans in March.

Funding rounds are supporting further business expansions into next year, Photo: Shutterstock

Nguyen Tuan Phu, CEO of CNV, said SaaS startups offer innovative solutions to optimise business processes, create new opportunities for market access, and boost sales. “There is ample potential for SaaS models as businesses tighten their budgets and cut unnecessary costs amid the economic recession. CNV is providing one solution that optimises resources and drives sustainable sales growth through the model of selling to old customers or nurturing new potential customers.”

Some startups are emerging as a bargain for venture capital funds amid the funding freeze if they offer an attractive business with transparent data, sustainable growth, and the potential to apply AI to scale up, Phu added. “It is also the reason why CNV has raised capital during this startup winter,” he said.

According to the Vietnam Startup Industry Report 2023 by Nextrans, capital inflow in the SaaS market experienced a modest recovery last year, with investments totalling around $6.5 million, nearly double the $3.4 million recorded in 2022.

This resurgence was driven by several notable late-stage investment deals, such as TopCV, 1Office, and Nami Technology, each securing an average valuation of $2 million.

Bui Hai Nam, CEO of smart sales management app SoBanHang, said, “Funding in the Vietnamese SaaS market is growing rapidly. The market in Vietnam is valued at $200 million and growing at 11 per cent annually. In comparison, the global market is worth $3 trillion, with a growth rate of 29 per cent per year. This presents a significant growth opportunity for Vietnam to catch up with the global trend.”

Another reason is that the government is actively supporting digital transformation, investing in e-governance and technology infrastructure, and assisting startups, Nam added. “Startups that survived through the funding winter can now thrive in the new global economic cycle, and venture capital funds have a fantastic opportunity to succeed,” he said.

Over the past two years, SoBanHang has made significant investments in developing technology to enhance management and growth efficiency for small businesses. This has resulted in a four-fold increase in growth, with over 500,000 satisfied users and overwhelmingly positive reviews on the App Store.

“We are currently focused on building a very innovative fintech solution to better serve our clients this quarter. Subsequently, we plan to initiate a Series A funding round to support further business expansion in 2025,” Nam said.

Besides funding flows into Vietnam’s SaaS startups, Nextrans also pointed out that the increasing utilisation of SaaS in industries such as banking, healthcare, and law in Vietnam has resulted in mergers and acquisitions (M&As) with the domestic market.

“This is driven by the need for market expansion, technology synergy, scaling operations, and market consolidation, creating opportunities for both investors and SaaS providers. M&A activities offer investors the potential for significant returns on investment, while SaaS providers can leverage these deals to access capital, expand their market reach, enhance technological capabilities, and strengthen their competitive position,” it said.

According to CNV’s Phu, as economic difficulties continue to linger, the upcoming trend of Vietnam’s SaaS industry will revolve around solutions for business management, optimisation, and sales operations.

“Some potential models are software to support orders on livestream, software to measure livestream performance, software to monitor the performance of the sales department, as well as customer care software,” Phu said.

Software firms assert footprint in billion-dollar markets Vietnam's technology majors are growing their presence in top global markets with many ambitious goals.