|VCs are backing startups in everything from video games to healthcare insurance services, Photo: Djinn Guild|
Nano Technologies, a Vietnamese pioneer that lets workers access their wages through its Vui App platform, successfully secured $6.4 million last week in an oversubscribed pre-Series A round led by Singapore-headquartered venture capital firm (VC) OpenSpace.
New investors in the round included Partech Partners, Tekton Ventures, IT Farma, and Sketchnote Partners, in addition to Golden Gate Ventures (GGV), FEBE Ventures, ACE & Company, and more.
The fresh funding round comes a year after Nano Technologies raised $3 million in its seed funding round, led by returning investors GGV and Venturra Discovery, noted Dealstreetasia.
Previous to its involvement in Nano Technologies, OpenSpace has also invested in other Vietnam's startups, such as edtech Topica and Finhay.
Finhay, a domestic digital investment platform, bagged a $25 million Series B round co-led by OpenSpace Ventures and VIG, along with Insignia, TVS, Headline, TNBAura, and IVC in late June.
Likewise, business software-as-a-service startup True Platform closed $3.5 million in seed funding from January Capital, Alpha JWC Ventures, BEENEXT, FPT Corporation, and other angel investors in May. The funding round was led by January Capital, a VC firm in Singapore with a portfolio of 40 startups from pre-seed round to Series C in the Asia-Pacific region.
In May, Singapore-based GGV and Vietnam's National Innovation Centre inked a cooperation agreement to strengthen the long-term relationship between the two sides and provide support for the development of the start-up community and innovation ecosystem in Vietnam.
Accordingly, GGV will increase investment in the nation, promote exchange, encourage new ideas and innovations, and act as a catalyst to promote the position of Vietnamese startups in the region.
According to the latest KPMG-HSBC joint study on Asia-Pacific's technology-focused startup landscape, Vietnam has one of Asia's newest and most dynamic startup scenes. Home to just 1,600 startups at the start of the pandemic, that total has now jumped to more than 3,000 (including the country's four unicorns), cited data platform Tracxn.
Driving the country's digital economy is a large, young population that is willing to adopt new tech and consumer services, supportive government policies, and a surge in overseas funding.
According to the Fintech Singapore Association, Vietnam's most active fintech investors include Y Combinator, Jungle Ventures, 1982 Ventures, and Goodwater Capital, among others.
In Vietnam, Jungle Ventures, a Singapore-based VC, is backing fintech startups including Medici, a startup striving to make healthcare and insurance more accessible and affordable to the masses; Timo, Vietnam's first digital banking platform; and KiotViet, a cloud-based point-of-sale and store management software suite with inventory and cash flow management, marketing, and other management solutions.
While based in the United States, Goodwater Capital has also been looking at investment potential in Southeast Asia. In Vietnam, its investments include MoMo operator M_Service, Vietnam's biggest e-wallet Anfin, and Nano Technologies.
1982 Ventures, meanwhile, has allocated a significant portion of its fund to Vietnam and committed to investing more capital in Vietnamese startups this year.
"We find that many Singaporean, regional, and global investors are aware of Vietnam's potential but unfamiliar with the market and startup ecosystem. As an early investor in Infina, Fundiin, and Homebase, 1982 Ventures has demonstrated that it understands and has access to high-quality Vietnamese fintech startups at the earliest stages," the VC firm said.
Although Vietnam's per capita GDP remains relatively low compared to others in the region, its economy is expanding faster than any other market. Growth is predicted to hit near pre-pandemic expansion levels of 5.5 per cent in 2022 and 6.5 per cent in 2023, according to World Bank estimates.
In general, KPMG estimated that venture capital deals in Vietnam surged to $1.1 billion in 2021, up from $301 million in 2020, and $330 million in 2019.
"Vietnam has emerged as a hub for startups, closely competing with the likes of Indonesia and Singapore. With a young, energetic, and educated population, high smartphone and internet penetration, and strong government support, Vietnam should maintain its position as a compelling destination for tech entrepreneurs and investors, making the country a thriving environment for potential unicorns," said Tim Evans, CEO of HSBC Vietnam.
"In terms of government support, perhaps we can start looking at how the government can create industry-specific policies and supportive frameworks for startups that focus on creating products and services that solve industry-specific challenges," director of KPMG Private Enterprise Nguyen Trung Kien told VIR.
William do – CEO, HOBBIT Investment
For several years, many tech startups in Vietnam have been knocking on the doors of Singaporean investors. There is an interest amongst them in our hard-working people, rising economic opportunities, and government-friendly approaches.
I have seen a remarkable development in technology progression, implementation, and application in Vietnam due to my experience working with projects at very early stages. The government is making efforts to expand and create conditions for technology niches to develop to the maximum and break through, creating innovative applications to support economic, social, and political development and affirmation to help build the role of Vietnam in general.
Human resources have become one of our vital strengths and play a big part in the technology movement of the Vietnamese market. Vietnamese people are one of the leading communities to adapt quickly and are open to receiving new technology ideas. Therefore, it is hard to ignore attraction from the effort and resources the Vietnamese startups bring to add value to the international market and the Singaporean market in particular.
Vice versa, Singapore is an ideal venue for Vietnamese blockchain startup thanks to its open policy and ease of access to international investment sources.
Herston Elton Powers – Managing partner, 1982 Ventures
The most significant trend for the Vietnamese startup ecosystem will be the emergence of fintech startups. While many of the technology incumbents have successfully gained market share in the e-wallet space, we expect the broader financial services stack to be developed by new startups and founders. The government's support for digital payments will unlock massive opportunities for fintech startups to increase access to financial services for all Vietnamese people and businesses.
We believe fintech sandbox models have been beneficial for most markets to help sustainably accelerate the pace of innovation. The key is that regulators and startups must be engaged in a productive and continuous dialogue to protect consumers and maintain market stability. The sandbox model can help provide clarity for market participants and decrease uncertainty for investors.
With that said, if sandbox registration and approval are not fit for purpose for startups – by not being affordable and expedient – innovative fintech solutions will be slow to launch and struggle to serve the economy.
Vietnamese startups can take cues from regional peers such as Singapore and Indonesia. However, we are confident that Vietnamese founders understand their local market. The nation's talent level is extremely high and potential founders should be excited about building the next Vietnamese unicorn.
By Luu Huong
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