Why Vietnam is Asia’s startup ecosystem to watch
By Kevin Tung Nguyen | Vietnam’s startup ecosystem is still relatively new compared to other markets, yet its growth potential is second to none. The country’s rapid economic expansion, coupled with its tech-savvy and increasingly educated population, provides startups with strong market demand and a highly qualified, yet affordable workforce.
Home to more than 3,000 startups, compared to 1,800 in 2015 and 400 in 2012, Vietnam is now Asia’s third largest startup ecosystem (National Agency for Technology Entrepreneurship and Commercialization Department). The country’s startup investment reached a record US$889 million in 2018, up threefold from $291 million in 2017 (Topica Founder Institute).
Today’s Vietnam, with a population of over 97 million people and an average 6% GDP growth rate, is defined by a growing middle class of young people who are destined to become the next consumer generation (General Statistics of Vietnam). This generation can now afford to buy a home, which reflects the tremendous change the country has undergone in the last few years.
Although Vietnam remains a cash-dominant economy where only 31% of people have a bank account (World Bank), the country’s mobile penetration is rising rapidly and is currently at 73% (We Are Social). Mobile phone use is driving digitization and changing consumer habits, as most people’s first Internet experience is on these devices. Internet use is now at 67% with 64 million users (We Are Social)–a significant increase from 50 million users in 2017 (Ministry of Information and Communications).
The right talent
Viet Kieu, or Vietnamese people who were born and raised overseas, are leaving a mark on the country’s burgeoning startup ecosystem through their experience and expertise. But let’s not forget about local entrepreneurs or those who were educated abroad and returned to contribute to the economy.
Two examples of the latter are Duc Pham and Diep Nguyen, who were both were born and raised in Vietnam. They co-founded MoMo (M-Services), a home-grown tech company that’s become the country’s number one e-wallet and fintech platform, boasting nearly 10 million users and funding from the world’s most prestigious venture firms. The company recently raised a $100 million Series C, which was one of the largest single rounds ever raised by a Vietnamese startup.
Another example is Tuan Pham, who is the founder and CEO of Topica Edtech Group, a leading online education provider in SEA with over $50 million in funding and 1,500 employees throughout the region.
Vietnam’s Generation Z is keen to enter the fast-growing tech sector. Empowered by the recent influx of smart capital, and prominent entrepreneurs and investors coming to the country, fresh graduates are more open to taking the riskier path of joining startups led by young founders over choosing corporate roles.
The government is aggressively promoting entrepreneurship and innovation, backing many accelerators and incubation programs offering mentorship and seed funding to local startups, such as the Vietnam Silicon Valley Project and Saigon Hi-Tech Park Incubation Center. It has also implemented tax cuts and more transparent legal frameworks targeting startups. The Ministry of Science and Technology’s (MST) National Technology Innovation Fund provides equity-free loans and grants for tech companies to invest in research and development.
Vietnam has also hosted a number of large-scale startup events in recent years. One prominent example is TechFest, an annual showcase of over 200 startups organized by MST. Prime Minister Nguyen Xuan Phuc attended the event in 2018, and it was broadcast live across the country. TechFest raised a total of $7.86 million for 160 startup projects in just three days.
While there is still progress to be made, Vietnam is well poised to become a key destination on the Asia startup map. Looking forward, fintech–especially on the consumer side–will still dominate the startup ecosystem in 2019. Aside from edtech startups, which have also seen large funding rounds, other frontier technologies–such as robotics, blockchain, and agritech–are expected to gain more traction in the coming years.
About the Author
Kevin is the Founder and CEO of JobHop, a software-as-a-service startup that leverages artificial intelligence and machine learning technology to help companies in SEA recruit faster, easier, and cheaper. The company raised a $710,000 Seed round in July 2017. Before JobHop, he co-founded a San Francisco-based software outsourcing firm and a social enterprise benefiting orphans and disadvantaged artisans in Vietnam.