Tech ecosystem ripe for startup buy-in

Tech ecosystem ripe for startup buy-in, source freepik.com

Wavemaker Partners, which has invested in five Vietnamese startups, is now looking to fund 3-4 more in Vietnam. Hoai Phuong Tran, lead for Vietnam at Wavemaker Partners said, “Vietnam has a fast-rising, sizable middle class with increasing disposable income. In 2020, the country had around 30 million middle class and rich consumers, with multiple fast-developing tier 2 cities. Vietnam’s per capita income was estimated at around $2,030 in 2021.”

Tran added that there is also room for growth for more tech unicorns. Vietnam only has four unicorns thus far out of Southeast Asia’s 29; compared with Singapore’s nine and Indonesia’s 10. Additionally, three of Vietnam’s unicorns achieved their status in the last two years, so there is a chance that more are poised to emerge as the market economy and tech ecosystem mature.

Vietnam is also the only country in Southeast Asia, apart from Indonesia, with a strong presence of both homegrown fintech players like MoMo and e-commerce actors such as Tiki. The country boasts a high adoption of smartphones and advanced mobile internet infrastructures.

“Yet at the same time, there remain plenty of pain points in consumers’ and businesses’ daily lives to be solved by technology. With Singapore left with limited room for growth, in Southeast Asia, Vietnam is only second to Indonesia in terms of attractiveness in venture capitalists’ eyes for the potential emergence of unicorns,” she said.

Vietnam’s startups continue to bag significant funds in this year. For example, Selly, a Vietnam-based social commerce platform, has raised $2.6 million in a Pre-Series A funding round from CyberAgent Capital, Do Ventures, Genesia Ventures, JAFCO Asia, and Kvision.

Meanwhile, Vietnam-focused retail investing app Infina also raised $6 million in seed funding from investors such as Sequoia Capital India’s Surge, Y Combinator, Saison Capital, Starling Ventures, Alpha JWC, and AppWorks. Additional investors who have backed Robinhood, Coinbase, and similar models in other markets also participated in the funding.

Likewise, the 10-minute grocery delivery app Rino received $3 million in a pre-seed round. Multiple investing firms such as Global Founders Capital, Sequoia Capital India, and more have jointly made investments in Rino, which will launch in Ho Chi Minh City.

Yuto Kono, principal and head of Genesia Ventures Vietnam, said that Vietnam is one of the three most important markets for Genesia Ventures. The company started investing in local startups from its inception in 2016.

“We feel that the startup ecosystem, including entrepreneurs, investors, and corporations, is growing rapidly every year. Global investors, including those from Japan, are increasingly paying attention to Vietnam, and we are convinced that it will become an even more exciting market,” Kono added.

Genesia Ventures has completed the first close of its third fund at $90 million, which it will invest in pre-seed and seed-stage startups in Japan and Southeast Asia, including Vietnam. The fund is looking at a total corpus of $130 million for the third fund, and its final close is scheduled for August.

Tran from Wavemaker Partners remains upbeat about the investments into Vietnamese startups. “I expect that an increase in resources in the technology ecosystem will lead to an increase in startup investment in Vietnam. On the supply side, we have the emergence of prominent accelerator programmes like Antler to transition traditional talent to startup founders and get them off the ground. We also have alumni from major tech majors leaving to start their own startups.”

Tran added, “On the demand side, more funds are turning their attention to Vietnam in all stages of investment. We start to see deals in the tens and hundreds of millions of US dollars done in the tech ecosystem. All these will lead to a beneficial feedback loop for Vietnam’s tech scene to mature.”

Apart from investment capital, she believed that venture capital funds’ investments into Vietnam’s ecosystems lead to additional benefits including know-how, professionalism, and training for talent.

In addition, there is a social and economic impact for consumers who benefit from diversified products and services to improve their quality of life.