Startup decade in full flow thanks to fund commitment

The Vietnam Venture Summit was the venue for announcements on major funding agreements, photo Kim Oanh

At the Vietnam Venture Summit 2020 co-organised by the Ministry of Planning and Investment (MPI), the Ministry of Science and Technology, and Golden Gate Venture in Hanoi, 33 venture capital funds committed to pouring $815 million into the Vietnamese startup ecosystem in the next five years, committing twice as much capital as during the first summit last year.

The venture capital funds included VinaCapital Ventures, 500 Startups, Alpha JWC, BeeNext, CyberAgent Capital, Do Ventures, ThinkZone, Vietrans, among others.

In the framework of the innovative startup festival Techfest Vietnam, one investor group among the delegation included a dozen distinguished entrepreneurs and investors from Germany, Switzerland, and Israel, who decided to establish a $100-million venture fund dedicated exclusively to Vietnam’s digital startups, excluding other commitments that arose during the four-day festival.

Philipp Rösler, former German Federal Minister of Economics and Technology and former Vice Chancellor of Germany who was born in Vietnam, commented, “Financiers are fascinated by the startup environment and dynamics in the country. In addition, the excellent management of the COVID-19 crisis by the Vietnamese government has improved the investment environment significantly in recent last months. At the same time, Vietnam has also manufactured high-quality surgical instruments and distributed them across the world, which helps position the nation as an ideal location for the production of medical equipment.”

Le Han Tue Lam, general manager of Nextrans – one of South Korea’s most active micro-investment and consulting firms – told VIR, “Although we cannot disclose the financial commitment and the beneficiaries at the Vietnam Venture Summit 2020, we are willing to support local startups in tech, fintech, and logistics. We selected beneficiaries based on market share, selling prices, and the effectiveness of products. However, the capacity of the founder team is also an important criterion.”

Nextrans reportedly pumped capital into 20 Vietnamese startups, including Luxstay, an online short-term rentals platform, and hospitality service Base – Asia’s first open platform for comprehensive enterprise solutions, recruitment services provider TopCV, and logistics startup EcoTruck.

Nguyen Chi Dung - Minister of Planning and Investment The pandemic has dramatically changed innovation and revealed shortcomings in some startups. However, in addition to some businesses facing challenges, others are getting more attractive and are developing well, like online meeting apps, education services, e-commerce, and deliveries, which are all part of the diverse and colourful picture of Vietnamese startups. Despite a lot of difficulties caused by COVID-19, Vietnam has managed the pandemic well and is forecasted to be the only positive-growth economy in Southeast Asia this year. In addition to maintaining and promoting this achievement, Vietnam is also joining the Fourth Industrial Revolution, putting science, technology, and innovation at the centre of the development. Therefore, the Socioeconomic Development Strategy for 2021-2030 points out sci-tech, innovation, and human development as priorities in the time coming. Additionally, Decree No.94/2020/ND-CP dated August 21 governing incentive policies for the National Innovation Center (NIC) has already been issued to create the most conducive environment for research and development, business, and investment activities. The NIC is in Hoa Lac Hi-Tech Park on an area of 3.5 hectares and will be the gathering place for large tech companies, who will be provided with laboratories and testing facilities for developing new ideas and concepts. The NIC’s establishment will gather innovation concepts in a fulfilment ecosystem, connecting all subjects and enjoying favourable conditions to strengthen research and sales. The MPI also promotes links between local and foreign venture funds. The startups that these funds invest in will be welcomed to the NIC and enjoy all incentives stipulated in Decree 94. Therefore, the NIC is expected to mobilise billions of US dollars into Vietnam’s startups. The MPI is also readying human resources for innovation activities. As such, the Vietnam Innovation Network has expanded its presence in countries like Germany, Japan, Australia, the United States, and Canada, with the participation of thousands of Vietnamese intellectuals. Besides these specific actions, I have already exercised three commitments set forth at last year’s Vietnam Venture Summit 2019, including maintaining discussion and connection of innovation ecosystems, establishing incentives for innovation, and mobilising resources for startups.

Realising 2030 targets

According to the Organising Board of the Vietnam Venture Summit 2020, in the previous year, 18 domestic and international investment funds committed to investing $425 million in innovative startups in Vietnam in the 2019-2021 period. So far, the actual investment in Vietnam’s startups has reached over 50 per cent of the committed capital, despite the pandemic.

These commitments are considered a constellation of benevolent factors to nurture domestic startups to emerge as tech unicorns, which contribute to realising the national strategy on the Fourth Industrial Revolution to have at least 10 firms by 2030 with export of products and services using Industry 4.0 technologies such as 5G, the Internet of Things, and AI to G7 countries.

To create a favourable environment for entrepreneurship, the Vietnamese government issued numerous incentives to nurture and support promising local startups in their journey to become national champions in the domestic ecosystem.

At the summit, Deputy Prime Minister Vu Duc Dam said, “The government has implemented many programmes to cash in on the opportunities of the new industrial revolution, creating a playground and market space for the startup community. These programmes combine with infrastructure development and the application of IT to make sure that local manufacturers provide every Vietnamese person with a low-cost smartphone. In addition, many platforms for healthcare, education, culture, tourism, and even charity have debuted.”

The government also mobilises the power of the community to create platforms, ecosystems, and big data for the community, offering the basis for the startup community to find its business opportunities, added DPM Dam. “The foreign and domestic business communities, especially startups, need to cooperate and create a solid network which can motivate other entrepreneurs to develop their business,” he said.

Unicorn ambitions

Along with issuing policies, the MPI is proactive in cooperating with unicorns in the region and other global tech groups to provide both capital and experience and help domestic startups to grow. One of these programmes is a strategic partnership with the MPI’s National Innovation Centre and Grab, in association with Singapore’s Infocomm Media Development Authority, Gobi Partners, Toong, YKVN, Microsoft, and Amazon Web Services.

Nguyen Thai Hai Van, managing director of Grab Vietnam said, “Many startups have trouble scaling past the early stage due to difficulties in optimising funds in a high-growth and dynamic market, as well as pivoting their business models to cope with the rapidly changing landscape. As Southeast Asia’s home-grown tech company, we understand the problem and know how to scale. Thus, we would like to share that experience with Vietnamese startups through Grab Ventures Ignite.”

Grab Vietnam announced bePOS, Stringee, GoDee, Papaya, and Vbee as the five winners of the first batch of Grab Ventures Ignite, an accelerator programme dedicated to Vietnamese early-stage startups, which aims to enable them to scale up faster and create an impact on the entire tech scene in Vietnam.

Currently, Vietnam has two unicorns valued at over $1 billion including VNG and VNPay. VNG Corporation became Vietnam’s first-ever unicorn tech startup was valued at $1 billion by the World Startup Report in 2014. Recently, intermediary payment services provider VNPay was named the second unicorn startup in Vietnam in the e-Conomy SEA 2020 report by Google, Temasek and Bain & Company.

Meanwhile, Yeah1 became the first media company in Vietnam to be listed in the stock market with a corporate value of $500 million. The company’s ambition is to become the first unicorn startup in the communications industry in Southeast Asia within the next three years.