South Korea venture capital funds latch onto Vietnam

December 07, 2022 | 09:00
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More venture capital funds from South Korea are considering Vietnam as an appealing investment destination, with a plan to ramp up funding in homegrown startups.

Last week, Vietnamese grocery platform Cooky secured a $4.5 million investment from South Korea-based firm Nextrans and local venture capital (VC) firm Do Ventures. Cooky will use the fund to speed up its research and development activities to produce a wider variety of nutritious meal packages at lower costs. By enhancing personalised services based on consumer wants, the startup will also put a priority on maximising customer pleasure.

South Korea venture capital funds latch onto Vietnam
South Korea venture capital funds latch onto Vietnam, photo shutterstock

Commenting on this deal, Seung-Ho Chae, managing director at Nextrans, said, “The Vietnam grocery retail market should be innovated to become more efficient and transparent. Cooky provides excellent ready-to-cook meals with better pricing and a pioneering system built for farm-to-table distribution. Nextrans believes that Cooky’s innovative model will make meal preparation more convenient and give Vietnamese people a healthier lifestyle.”

The latest deal is part of Nextrans’ strategy to fund Vietnam’s early-stage startups in emerging sectors. Among them, Vietnam’s e-grocery market is expected to reach $1.5 billion by 2025. Nextrans also has a plan to launch a new 50-million Vietnam-focused fund to continue supporting Vietnam’s tech startup ecosystem.

Besides investing in early-stage startups, the new fund is also looking for opportunities in sustainable growth sectors like electrical vehicle, food waste, and food safety solutions in addition to emerging sectors like proptech, software-as-a-service, and fintech. The size of its check might reach $3 million.

Likewise, Vietnamese startup area on the radar of Lotte Ventures, the VC arm of Lotte Group. Lotte Ventures is expected to seek potential startups to make moves in early 2023. Under its plan, the South Korean fund will invest $1 million for a project. It gives priority to tech startups or startups that have potential to scale up quickly in the Vietnamese market.

Jeon Young Min, CEO of Lotte Ventures, is upbeat about the potential of the Vietnam’s startup market. “Investing in key startups is about capitalise on the future growth rather than the current value. It’s just a matter of how much you put in, and how much you’ll get back. I think here is no place with the greatest potential for development like Vietnam’s startup ecosystem.”

Indeed, Vietnam is South Korea’s largest economic partner in ASEAN, with 30 per cent of South Korean investment in the bloc directed to Vietnam. As a result, Vietnam has become an important location in the supply chain for major South Korean manufacturers and service providers. The aggressive expansion of such groups also facilitates the wave of VC funds in Vietnam.

Charles Rim, general partner of Access Ventures LLC, said, “In 2019, we saw a significant increase in overseas VC funds in Vietnam. The South Korean wave started in 2018, but the following year we started to see more Singaporean VC funds as well as even Chinese funds gain interest. The pandemic pushed back significant inflows, but 2021 saw increased deal volume because of the pent-up demand.”

In addition, Rim predicted that Vietnam has the potential to create the most unicorns out of Southeast Asia.

“Two of the strongest themes in Vietnam in the coming time include the growth of digital commerce and media along with the expansion of credit with improved data,” Rim said. “We see equal opportunities for unicorns to come from both business-to-business (B2B) and business-to-consumer (B2C). We note South Korea has more than three quarters of its unicorns coming from the B2C sector. In terms of credit expansion, we see this as a bigger opportunity for B2B-type businesses. We also expect a significant ramp up in blockchain-related projects, so I also am keen to look for opportunities in this sector.”

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