Vietnam puts right conditions in place for startups to grow
The trade war gave a big boost, but let’s not forget that Vietnam is a fast-growing market in its own right and has the right conditions for the startup scene to grow and mature regardless, said Nikhilesh Goel, co-founder and COO of Southeast Asia investment firm Validus Capital.
Vietnam has been boosted by US investment that has shifted its focus away from China, but the country’s good fortune is the result of years of changes, both public and private, according to Nikhilesh Goel, co-founder and COO of Southeast Asia investment firm Validus Capital.
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This have resulted in pre-trade war success stories like Momo, an e-payments company, and Tiki, an ecommerce company, he stated.
Bobby Liu, senior director at Topica Institute, a Vietnamese education technology startup, said in the past 18 months, the country’s startup scene has experienced healthy investment from both China and America, buttressed by increasing interest from a diverse group of Asian investors as well as major tech companies in the US and China.
The most high-profile change came when Google announced in late August that it would move production of the Pixel phone from China to Vietnam, marking a significant on-the-ground moment in the US-China trade war.
Then, Grab — the Southeast Asian equivalent of Uber — announced plans to invest $500 million in Vietnam over the next five years.
The announcements offered a public confirmation of what tech investors and executives in the region had already known for years — Vietnam’s market had begun to flourish. It is now the third-largest startup market out of 10 ASEAN countries, according to a new report from Cento Ventures, a Singaporean venture capitalist firm. Two years ago, it was sixth.
Amra Naidoo, the co-founder of Accelerating Asia, a program that helps startups, said Vietnam’s government has played a crucial part in fostering the country’s startup scene.
“The Vietnamese government has thrown its weight behind initiatives introduced to bolster the fledgling startup ecosystem,” Naidoo said. “In recent years, programs such as the Vietnam Silicon Valley, Saigon Innovation Hub and Business Startup Support Center have been established to accelerate and form the nucleus of this growth.”
She also pointed to the ripple effects of an increased investment in education and a larger increase in foreign direct investment.
Vietnam’s tech industry has also been able to turn something of a trick when it comes to China. Chinese money has flowed into Vietnamese startups, but Vietnam is also seen by other investors as not being overly reliant on their neighbor to the north.
While startups have received money from major Chinese companies including Tencent, Alibaba and JD.com, all of the major startup exits (when a startup is acquired by another company or goes public and repays its investors) have been facilitated by companies outside of China, according to the Topica Institute.
Daniel Song, a senior associate at the South Korean venture capital firm Access Ventures, said investment in Vietnam was driven by the South Korean conglomerates known as Chaebols (such as Samsung) who paved the way for more diverse investors.
According to Song, when Access first entered the market four years ago there was only a few Korean venture capital firms in Vietnam. Today, there are close to 15 South Korean firms actively investing in Vietnam.
The most interesting startup market “has clearly become Southeast Asia, specifically Vietnam,” Song said. “It goes back to familiarity with the market.
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