Vietnamese startups draw $1.3 bln worth of investments in 2021

The country currently has over 3,800 startups, including three unicorns, or companies valued at over $1 billion, VNG, VnPay and MoMo. There are 11 others valued at more than $100 million each.

More than 200 funds have invested in Vietnamese startups, most of which are in fintech, e-commerce, logistics, insurance, real estate, education, and healthcare.

Many use new technologies such as AI, big data, blockchain, and NFT.

Hoang Duc Trung, CEO of VinaCapital Ventures, said there were two key reasons for startups’ great attractiveness in 2021.

Firstly, Vietnam is a large emerging market with a population of 100 million and a fast-growing economy in which “pain points” arise in many fields, especially logistics, healthcare, education, finance, and insurance, making it “fertile” for startups, which are growing stronger and attracting increasing attention from investors, he said.

Secondly, the current wave of startups in Vietnam is already the third generation, with their founders having a lot of international and local experience in fundraising, governing and mastering new technologies, and universities and large corporations training and providing a high-quality tech workforce, he said.

He pointed out the country has many favorable factors for startups: wide Internet coverage, a high rate of smartphone users, a young population with a high level of education, and strong government support for the digital economy.

“We expect the startup community to be able to make a big breakthrough in digital products and services”.

Some 60 percent of companies in VinaCapital Ventures’ portfolio expanded their scale both at home and abroad in 2021, he added.

Firms said it was a relatively difficult year because of the pandemic, but after the initial shock in 2020, startups adapted and tweaked their business activities.

“Companies that have survived the most volatile times have started to recover and grow again,” a spokesperson for the venture fund told VnExpress.

According to Do Ventures, 2021 and beyond is a pivotal time in the maturation of the Vietnamese startup ecosystem for three reasons: they have started to target regional and global markets instead of only the domestic market, they are able to launch products and services using sophisticated technologies such as AI and blockchain and the market already has mature startups like MoMo, Tiki and VNG, who will become investors in future.

“[These] will certainly have a very positive effect on the entire startup ecosystem in the near future”.

Giang Tran Minh Thanh, investment representative in Vietnam of Thai fund Kvision, expected the strong investment flows into Vietnamese startups to continue in 2022, with many large global funds such as KVision, Bace Capital, Goodwater, and Sequoia Capital active in the market.

But foreign funds could be picky or even stop new investments abroad, focusing instead on opportunities in their own countries amid a risky business environment and inability to visit Vietnam to size up startups amid the pandemic, he said.

Analysts said digital transformation of traditional industries could attract big investments.

“In addition to already developed sectors such as fintech and e-commerce, some other sectors like edtech, medtech and digital transformation tools for businesses are also attracting investment,” Do Ventures said.

Trung said besides areas like healthcare, finance, payments, AI, tourism, logistics, and education, VinaCapital Ventures is also interested in gamification, blockchain, online to offline retail, and multi-platform media.

Besides, the government’s plan to increase public spending on infrastructure will benefit companies in construction and building materials.

Vietnam’s economy is driven by domestic consumption, which accounts for nearly 70 percent of GDP, and so the retail industry is expected to recover and grow strongly thanks to the growing middle class and urbanization.