Although Vietnam’s startup market is relatively young, it is considered dynamic and promising and is attracting intense interest of venture capital funds.
Vietnam has adopted changes in mechanisms and policies on innovation in recent years. This was reflected in its 2021 Global Innovation Index (GII) ranking in 44th place (out of 132) compared to 52nd place (out of 141) in 2015, and its retention of the lead among 29 countries of the same income level.
According to the recent Vietnam Innovation and Technology Investment Report, total venture capital in innovative startups in Vietnam has reached US$1.4 billion. Vietnam ranks third in Southeast Asia (after Singapore and Indonesia) in terms of the number of invested startup projects and the value of capital invested in start-ups.
To date, more than 200 venture capital funds have invested in startups in Vietnam, nearly one fifth of them domestic funds, according to the report by the Ministry of Planning and Investment’s National Innovation Center. Investment funding of Vietnamese startups is forecast to exceed US$2 billion this year.
Payment, e-commerce and online gaming related to blockchain games have taken the lead in attracting investment capital.
Hoang Thi Kim Dung, an investment specialist at Genesia Ventures in Vietnam, said that major global investment funds are focusing on promoting their brands and communications to increase access to startups.
Speaking at a recent webinar entitled “Vietnam Market Entry: Opportunities and Strategies”, Binh Tran, General Partner of Ascend Vietnam Ventures, said Vietnam is the perfect pilot environment in Asia with a growing middle class willing to spend on health care, education and shopping services. This has spawned increasing online services to meet these needs.
Experts attribute the lure of the startup market to governmental support mechanisms and policies for foreign-invested enterprises, including start-ups. The Law on Investment (2020) provides investment incentives for innovative start-up projects, innovation and R&D centers, including tax breaks and exemption or reduction of land use levy and land rent.
According to Katie Nguyen, Deputy Director of Sunwah Innovations, building relationships and trust are two essential factors for foreign companies to succeed in Vietnam. Therefore, the role of intermediaries in connecting the start-up ecosystem with support organizations is extremely important.