Việt Nam has become an ideal eco-system for both domestic and foreign start-ups, and the effects are showing, with start-ups mushrooming all over the place. Việt Nam News’s Thu Ngân spoke to fund managers and executives at successful start-ups and asked them about the phenomenon.

Peter Ryder, CEO of Indochina Capital

Việt Nam’s biggest advantage is its people. The Vietnamese are among the most entrepreneurial and ambitious people I have met, which paired with Việt Nam’s exceedingly young population creates the perfect storm for start-ups to thrive.

With that said, Việt Nam’s start-ups suffer from the country’s bureaucratic issues, namely the lack of laws that govern newer forms of business. While not applicable to all start-ups, many struggle to take off because of these issues and it makes seeking investment extremely difficult for these start-ups.

It seems that many are quickly sold to big corporations, most likely because they lack the ability to acquire funding and grow organically. Raising capital is one of the hardest aspects of the start-up scene in Việt Nam as we know from experience. It will definitely be refreshing to see more start-ups remain independent and be able to develop without the intervention of large corporations, but that is the way the scene currently operates.

While I am not as knowledgeable about start-ups in other countries, I do think Việt Nam’s start-up eco-system is a step ahead of most of its neighbors. With obvious exceptions in China, Hong Kong and Singapore, Việt Nam seems to be one of the countries that have fostered a strong start-up eco-system in the region, which I think goes back to the entrepreneurial spirit imbedded in society.

Globally, Việt Nam has a lot of work to do. While it is not surprising, we still do not hear about many Vietnamese start-ups on the news.

One step the Government can take is to invest more in education, specifically higher education and continue to be open to allowing international institutions of higher education to enter the country, as many startup ideas are conceived at universities.

Outside of investing in education, Việt Nam could organise more events related to the world of startups. We are starting to see more and more conferences that invite startups, venture capital firms, private investors and the general public to not only connect these young companies with potential investors, but also serve to raise awareness and educate. I encourage all aspiring or working entrepreneurs to attend this events in order to get your name out there and to network with potential investors and collaborators.

Trần Nhật Khanh, Head of Technology Investment, VinaCapital

The eco-system is maturing at a rapid pace. Over the past decade we saw the key constituents of the start-up scene gear up for the boom we are beginning to see. The Government has been shifting from a supporting to a driving role, founders are becoming more sophisticated and many of them have already gone through one or more start-ups and people are becoming increasingly tech-savvy. Last year Vietnamese start-ups won more international pitching competitions than ever before.

In my view, our eco-system is a combination of the best parts of many other eco-systems: we have dynamic Government support as in Singapore, we have real “pain points” to fix like Indonesia and we have tech talent quality that rivals India but at a much more competitive cost. Our people are hungry when it comes to innovation and the influx of returnees is really helping improve the overall quality of the eco-system. This combination is tough to beat.

We need a flexible regulatory framework to deal with new business models, and we probably should prioritise “sandbox”/pilot programmes over trying to come up with a perfect framework that may slow down innovation. In short, the regulatory environment needs to keep pace with the speed of change and further foster the growth of the eco-system.

In 2018 close to US$1 billion was invested in start-ups in Việt Nam, and in 2019 and 2020 we are highly likely to see that number double or triple. Valuations are still reasonable despite the solid growth of the economy, and I am very bullish on tech/innovation over the next five years.

Jerry Lim, Country Head, Grab Vietnam

The start-up eco-system in Việt Nam has huge potential for breakthrough. The number of start-ups in Việt Nam increased more than seven fold between 2012 and 2018 to 3,000, the third highest growth rate in Asia. Also, tech clusters are expanding geographically. Besides HCM City and Hà Nội, Đà Nẵng now has many tech start-ups and events.

The country has a number of strengths to create a fertile start-up environment like young demographics, growing internet penetration, consistent increase in investment by both local and global investors, and Government support for technology and innovation to accelerate its industry 4.0 ambition.

We are proud to be part of this growth story and actively contributing to it, whether through our R&D centre in HCM City, investing in partnerships with local start-ups like Moca or enabling millions of people in Việt Nam to have greater access to digital and financial services.

Many start-ups have difficulty scaling past the initial growth spurt or entering new countries. With our experience in operating in eight countries and over 336 cities, we understand the problem and want to share our experience with them on how to scale up.

We have also opened up our GrabPlatform to enable other Southeast Asian firms to build on our digital eco-system and grow in the region.

We have also started Grab Ventures aimed at discovering and growing Southeast Asia’s next generation of technology leaders and promoting innovation and digitisation. Grab will partner or invest in growth-stage start-ups who want to solve mobility, food, logistics, fintech and other O2O challenges.

We look forward to bringing these programmes to Việt Nam and playing our part in nurturing the tech eco-system and start-ups.  

Dương Đỗ, CEO and Founder of Toong

We have detected a myriad of positive changes happening within the sectors that make up the eco-system of start-ups in Việt Nam: the Government, leading corporations, private-equity funds, media firms, educational organisations, and new and established start-ups.

Though there is still much room for improvement and many gaps to be filled to create a holistic and concrete eco-system in which each and every component is seamlessly connected in an interdependent relationship, it is doubtless that we are making significant progress, even if it is superficial progress.

In my opinion, we have been oblivious to the foundation of a sustainable start-up eco-system for such a long time. I believe it is the cultivation of virtues that forms the essence and core belief of a genuine creator.

Anyone can call themselves a founder or a CEO. But to be a genuine creator who creates authentic values for their community, one must first and foremost nurture their sensitivity towards life and thereupon turn inwards, achieve self-enlightenment and get rid of any self-imposed barriers that separate an individual and the rest of the world. Those are the prerequisites for anyone to create groundbreaking services and products that will not only raise the bar for the industry they are in but also transform their customers. And only such services and products can be called “values”.

We are living in a world in which people are driven to mindless, incessant and incremental consumption. We own an excessive amount of goods but lack true personal values. If we encourage people to start up for the sake of having a business, to establish large projects merely for profits and personal fame and without any firm foundation in virtues and values, no monumental effects will be created or sustained in the foreseeable future. And the world we are building will turn into a hyper-consumerist society and stray far away from empowering, meaningful values, won’t it?

We admit that in terms of technology, finance, policy, or business practices, we have no competitive advantages that put us at the forefront of the Asian market, let alone command a global lead.

Bobby Liu, Senior Director, Topica Edtech Group, Co-Director of TFI

In the context of Southeast Asia, I think Việt Nam’s start-up eco-system is growing nicely over the last few years.

We are lucky in that the most important element, entrepreneurial spirit, is already ingrained in Vietnamese. This, coupled with a strong focus on engineering during the early years of Việt Nam’s opening, is now finally being utilised for the good of Việt Nam.

Việt Nam is moving along nicely, its trajectory is indicating further growth by taking advantage of its economy.

From various indicators, I would say Việt Nam’s growth has been pretty amazing, with double digit increases in the number of start-ups getting funding and the funding amount.

Moving forward, Việt Nam’s eco-system will grow through understanding of its strengths and weaknesses.

The Government has done a lot to develop the eco-system. I like the fact that the eco-system is growing organically. Unlike in Singapore where a lot of money was ploughed to create inertia back in the 2000s -- and this was not a bad thing at that point of time -- it is not that necessary now. We are lucky in that many lessons were learnt along the way in the early stages of growth.

Moving forward, Việt Nam should further open the eco-system to foreigners as we continue to internationalise development of our products. One of the things that can be done is what is commonly known as a ‘startup visa’, which allows some qualified foreigners to come and live and work with developers in Việt Nam.

Foreign funds are not just keeping an eye, they are already here. This is evident from the fact that nearly $900 million were invested in start-ups in Việt Nam, according to the TFI Funding Report 2018. And recently a group of institutional investors has pledged to invest more than $400 million in start-ups in Việt Nam.

What’s more interesting is that in the last 18 months more than eight venture capitals (VC) funds have been set up in Việt Nam, with sizes ranging from $30 million to $100 million. This is critical since local VC funds form the initial seeding for our start-ups to get them ready for regionalisation, where they will interest foreign VC funds.

In the last 24 months more than 200 VC funds have invested in start-ups in Việt Nam. You’re seeing increased interest from VC funds in Korea, China and even Silicon Valley.

Pierre-Antoine Brun – COO of Leflair Vietnam

Until now Việt Nam has been relatively under the radar when it came to start-ups. I believe it has not been perceived in the right way and has been underestimated, especially by foreign investors. The reality is that Việt Nam is already a large consumer market, its consumers have a lot more purchasing power than there is supply domestically and there is a massive opportunity for start-ups to solve plenty of problems. 

What's very unique about Việt Nam is its entrepreneurial culture. Nowhere else in the region can you find as much drive from people to start businesses and so little fear of failure. If you add to that a business-friendly environment and the right focus from the government on developing infrastructure and attracting foreign investments, you have a good foundation for entrepreneurs and companies to thrive.

Việt Nam is a great place to start a business. It has the right amount of talent and infrastructure and is actually a much easier place to do business in than some of its Southeast Asian neighbours.

What one needs to acknowledge from the start when starting a company here is that the best place to start is not always the best place to scale, and that only so much growth can happen so fast in a market that, although growing incredibly fast, has a long way to go to catch up with developed nations. A long-term approach is therefore necessary in markets like Việt Nam, both for start-ups and investors.  — VNS