Vietnam has tools to latch onto startup movement

January 12, 2023 | 08:00
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International venture capitalists are still optimistic on Vietnam’s startup scene amidst global headwinds. Vinnie Lauria, managing partner at Golden Gate Ventures, discussed with VIR’s Van Huong the future trends for venture capital funds and how the government could support startups.

How do you assess the startup scene in Vietnam in 2022?

Vietnam has tools to latch onto startup movement
Vinnie Lauria, managing partner at Golden Gate Ventures

Vietnam’s startup scene is at an inflection point, and 2022 was a very crucial year in its development. It marks the confluence of many different factors that will take Vietnam startups from good to great: the global macroeconomic environment, Vietnam’s position in the region and the tailwinds of the pandemic have created the perfect environment for Vietnam to finally capitalise on its top tech talent, highly educated population, and openness to international trade.

This is Vietnam’s time to shine – in Asia and on the global stage.

What are the challenges of Vietnam’s businesses/startups in the context of increasing inflation?

Rising inflation is a challenge that the world is facing and is not unique to Vietnam. In fact, Vietnam has been very skilful in managing inflation across 2022 and has come out comparatively stronger in the region.

Even with rising inflation, the country is still going to grow at a phenomenal pace, way ahead of other Asian economies. Vietnam’s growth for 2023 is pegged at 6.7 per cent, while growth estimates for Asia are estimated at 4.6 per cent, according to the International Monetary Fund.

Against a more cautious outlook globally, Vietnam’s startup scene is still poised to thrive, as it will continue to attract a disproportionate amount of foreign direct investment into the country.

Vietnam’s openness to international trade and its support of the startup ecosystem are critical ingredients that complement how the government is balancing inflation pressures. The recent Vietnam Venture Summit that the Ministry of Planning and Investment held with Golden Gate Ventures is an example of how forward-looking and committed the country is to accelerating the startup scene.

What are some of the most significant trends for startup expansion in the next few years?

Fintech, healthtech, edtech, agritech, and e-commerce are evergreen growth drivers – the digitalisation of traditional economic pillars represents a huge opportunity that has yet to be fully explored in Vietnam.

Climate tech is the other vertical to watch. There will be tremendous innovation in this space and the market will be bullish about this, but not everything is going to turn to gold. The challenge for investors is to find the right mix of innovation, business model, and market readiness.

Underpinning all these verticals, AI and machine learning will be dramatic game-changers in the next few years.

Could you further elaborate on the future trend of venture capital (VC) funds in 2023, particularly for Vietnam’s startups?

Vietnam will continue to be a magnet for global capital flows, and more VCs will be bullish about investing in Vietnamese startups.

Those less experienced in the market will focus on more familiar territories like e-commerce and fintech, but the catch is that fintech, for example, is still an area where the country needs to further develop its regulatory frameworks.

We will see some VCs win big and others struggle with difficulty. Ultimately, market experience and insight into the local operating environment will separate the winners from the losers. Golden Gate Ventures has been investing in Vietnam for a decade, analysing the market nuances at every point of its growth. This invaluable insight helps us know what others don’t.

What is your take on a potential sandbox model for startups in the country?

The sandbox model is particularly relevant at this point in Vietnam’s economic development and the regulatory sandbox for fintech activities, which has maintained steady progress, underscores the relevance of the model.

The sandbox model could help accelerate the development of regulatory and infrastructure frameworks at a time when there is tremendous disruption brought on by AI and machine learning.

This creates an opportunity for different rules to be developed without necessarily having the baggage of outmoded frameworks. Very importantly, this approach can help create frameworks that more accurately support market realities.

Sandboxes are not a silver bullet and the road ahead will have its own inherent challenges, but Vietnam’s progressive approach should give businesses and investors confidence to keep innovating and launching new products and services.

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By Van Huong

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