Vinacapital ventures

GoStream will use the new tremendous funding to expand operations

GoStream was founded in 2017 by three seasoned engineers with track records in digital enablement. GoStream is an easy-to-use platform for any type of user, even for those with little or no technical knowledge. It enables users to reach a larger audience from different platforms to increase visibility and get more views. Currently, the company is serving multiple corporate clients and facilitating over 100,000 livestreaming sessions daily.

GoStream is dedicated to providing an interactive experience that encourages viewer participation in live videos. This increases viewer engagement and contributes to the building of a larger and more loyal community that follows a user’s content.

Marketwise, social networks are recognised as the next most common channel for online shopping in Vietnam, just behind e-commerce sites. According to PwC Social Surveys, Vietnam ranked seventh in the world in the number of Facebook users (68 million) which accounted for 68.7 per cent of the country’s entire population. In 2020, Vietnam’s “digital economy” reached $14 billion and is expected to grow to $52 billion in 2025, according to a recent report by Google, Bain & Company, and Temasek.

Trung D. Hoang, partner at VinaCapital Ventures, commented, “We are excited to invest in GoStream, which has been leading the way in integrating livestreaming across a number of sectors. Their innovative streaming technology is helping more businesses reach more viewers and customers, and we look forward to working with them as they further expand their capabilities and play an even greater role in Vietnam’s growing digitalisation.”

In November 2020, GoStudio – a product of GoStream Technology JSC – won first prize at Vietnam Techfest 2020. The contest’s organising committee recognised the product’s ease-of-use and adaptability to a range of online channels, including social commerce (livestream commerce), online training (e-learning), online entertainment (live gameshows). This became especially important as the COVID-19 pandemic swept the world. GoStudio does not require software downloading or installation and it is stable and compatible with popular web browsers, enabling more users to apply livestreaming across various sectors.

Vietnam tops the list of destinations for venture investors for the next 12 months.

Live video streaming startup GoStream secures 7-digit funding

GoStream, a fast-growing Vietnamese startup that provides multi-platform livestream broadcaster for social sellers, marketers, and content creators, has announced that it has secured a 7-digit USD funding from VinaCapital Ventures.

In the ‘new normal’, startups could become technology unicorns

Rapid digital transformation will serve as an important driving force for technology firms to become unicorns in the future.

Don Lam – CEO, VinaCapital Group

In 2021, residential real estate prices are likely to climb for a variety of reasons, and we expect the industrial sector to continue booming as multinational manufacturers accelerate diversifying their production from China to Vietnam.

That said, it is becoming harder for foreign real estate investors to make money in Vietnam because of stiffer competition from increasingly sophisticated local investors and developers. For that reason, we believe the best way for foreign investors to get exposure to Vietnam’s real estate market – which is arguably one of the most attractive markets in the world – is to partner with existing players who are on the ground and who understand those investors’ requirements.

Resilient residential market

Rents in Ho Chi Minh City and Hanoi plunged in 2020, which was not surprising given everything that happened last year. However, residential real estate prices increased substantially because the supply of new housing units was constrained (and well below demand), and because interest rates also dropped last year.

The unusual combination of falling rents and soaring residential real estate prices was a global phenomenon that is unlikely to be repeated in 2021, but supply constraints will continue putting upward pressure on Vietnam’s residential real estate prices in 2021.

We estimate that the combined demand for new housing units in Ho Chi Minh City and Hanoi is around 200,000 units per year, given Vietnam’s circa 3 per cent per year urban population growth rate, and given an estimated 100,000 per year of new household formations (that is, people getting married).

In contrast, only about 60,000 new housing units per year have been launched for sale in recent years, and that figure is likely to have dropped to around 40,000 in 2020 due to COVID-19 as well as to legal and zoning issues that have severely slowed new project approvals in Ho Chi Minh City since 2018.

It is very likely that the project approval issues that plagued the Ho Chi Minh City market over the last two years, and started to impact the Hanoi market in 2019, will begin to be resolved into this year. That said, it is likely to take until at least 2022 before the supply and demand in Vietnam’s residential real estate market is balanced out, because of the time it will take to engage a new cohort of civil servants that is empowered to resume approving more residential projects, and because of the time it will take to actually construct those new apartment buildings and other residential developments after the required project approvals are secured.

Furthermore, the long-term outlook for Vietnam’s residential real estate market is very strong because the country’s GDP growth is likely to range between 6 and 7 per cent over the next decade; because mortgage financing is becoming more and more widely available (Vietnam’s mortgage penetration rate was still around 7 per cent of GDP in 2020, versus nearly 25 per cent in Thailand); and because real estate prices are still affordable for most emerging middle-class consumers.

In addition, we estimate that a typical middle-income couple can afford to purchase a mid-tier apartment (circa $1,300 per square metre) by getting a mortgage from the bank, in which their monthly mortgage payments are equivalent to about one-third of their combined monthly salaries. This ratio is typically considered within the range of affordability.

Booming industrial sector

Trade tensions between the United States and China began escalating about three years ago. Since then, lease rates in industrial zones (IZs) in Vietnam have been increasing at a 10-20 per cent annual rate, and it has become difficult to find even 5-10 hectares of industrial land to immediately occupy within 30km of Ho Chi Minh City’s central business districts (CBD).

Multinational manufacturers had already been relocating some of their production out of China and to Vietnam before the US-China trade tensions erupted, because factory wages in China had essentially tripled over the last decade, and wage inflation in that country was about double that in Vietnam over that time, in USD terms.

Donald Trump’s initiation of the US-China trade war accelerated diversification of those corporations in terms of their production activities out of China, and then COVID-19 intensified those diversification efforts. That is because supply chain disruptions faced at the height of China’s COVID-19 outbreak showed manufacturers that had previously believed had global supply chains actually just had Chinese supply chains.

For all of those reasons, about 20 per cent of the factories that are located in China are likely to leave the country over the next 10 years, according to surveys published by Union Bank of Switzerland and others.

Most manufacturers leaving China prefer to relocate to Vietnam, according to surveys published by Standard Chartered, the Japan External Trade Organization (JETRO), and others. We believe that Vietnam has the capacity to absorb a good amount of that relocated production.

Vietnam’s manufacturing sector has consistently accounted for less than 20 per cent of the country’s GDP in recent years, but the contribution of the manufacturing sector in every other “Asian Tiger” economy peaked at over 30 per cent of GDP, which gives an indication of how much bigger Vietnam’s industrial sector is likely to get over the next decade.

Furthermore, the government strategy to “build a nest to welcome eagles” by improving the country’s physical infrastructure and by raising Vietnam’s ease-of-doing-business rankings will help ensure industrial activity continues to grow in the years ahead.

All of this clearly augurs well for a continued boom in the demand for Vietnam’s IZ space for years to come. For that reason, it is not surprising that all of the local commercial real estate brokers are significantly growing their industrial real estate brokerage teams to field the growing volume of inquiries from foreign manufacturers and logistics providers.

Landscape for non-nationals

Foreign direct investment (FDI) into Vietnamese real estate was more-or-less unchanged in 2019 and 2020, although the composition of FDI shifted because investment into hospitality projects understandably fell, but that into industrial real estate soared – accounting for about one-third of the country’s registered real estate FDI last year.

Also, foreign real estate investors now face stiffer competition from increasingly sophisticated local players. For example, inquiries from overseas financiers about distressed real estate investment opportunities surged in 2020, but those investors found that the number of such projects in Vietnam was limited, and that local funders were better positioned to take advantage of those opportunities.

Also, the acquisition of “trophy properties” such as high-profile resorts and apartment buildings that are typically of interest to foreign investors with ample financial resources is becoming increasingly dominated by local ones instead.

For that reason, it is not surprising that the advisory businesses of leading commercial real estate brokers like Savills, CBRE, and Cushman & Wakefield are increasingly dominated by mandates for local investors. Furthermore, local real estate developers raised over $7 billion in 2020 by issuing corporate bonds, so all of these discussed trends are likely to continue in 2021.

Foreign investors are increasingly focusing on projects in the suburbs because overseas developers have had difficulty sourcing appropriate plots of land near the CBD’s of the country’s major cities. Additionally, infrastructure development is making it possible for people to live further from the CBD.

As for industrial real estate, foreigners have been investing in the industrial sector via joint ventures with existing local players and have been shifting their focus from nearby Haiphong to the periphery of Hanoi. Also, the IZ business in Vietnam is still fairly fragmented compared to other countries in the region.

Finally, South Korean investors accounted for over half of Vietnam’s registered real estate FDI in 2020, and that high level of interest is likely to continue going forward for a variety of reasons. South Korea’s GDP growth will slow over the next decade, partly because the country’s population is set to decline at a faster rate than Japan’s currently is.

When Japan faced similar secular stagnation issues in the early 1990s, investors poured money into Southeast Asia as investment opportunities in their home market became less and less attractive as GDP growth slowed. We believe a similar phenomenon will drive South Korean investment into Vietnam for years to come.

Startups expand with fresh funding and portfolios

In February, ELSA, a smartphone app that helps non-native English speakers develop grammar and speech skills, wrapped up a $15 million investment in financing rounds co-led by Vietnam Investments Group and SIG. Existing investors including Google’s Gradient Ventures, SOSV, and Monk’s Hill Ventures’ AI-focused venture fund joined the company’s Series B funding phase.

ELSA, which stands for English Language Speech Assistant, was co-founded in 2015 by Vietnamese entrepreneur Vu Van and engineer Xavier Anguera and focuses on the three markets of Vietnam, India, and Japan. With the fresh fund, the startup plans to penetrate Latin American countries as well as accelerate expansion across Asia this year.

Another million-dollar deal was secured by e-wallet MoMo in January, bagging over $100 million in its series D financing from leading global investors. The fund will be used to establish a new super-app platform, enhance MoMo’s ecosystem which serves millions of Vietnamese end users, and launch MoMo Innovation Ventures – an initiative to invest in Vietnamese companies with potential to be integrated into MoMo’s ecosystem for the benefits of access to a broader market and user base.

Also in January, live streaming platform GoStream announced that VinaCapital Ventures had invested $1 million into the company. Founded in 2017, GoStream is an easy-to-use platform that enables users to reach a larger audience from different platforms to increase visibility and get more views. Currently, the company is serving multiple corporate clients and facilitating over 100,000 live-streaming sessions daily.

Trung D. Hoang, partner at VinaCapital Ventures commented, “We are excited to invest in GoStream, which has been leading the way in integrating live-streaming across a number of sectors. Their innovative streaming technology is helping more businesses reach more viewers and customers, and we look forward to working with them as they further expand their capabilities and play an even greater role in Vietnam’s growing digitalisation.”

Meanwhile, startup e-wallet firm Gpay, a member of G-Group Technology Corporation, completed its Series A investment with the participation of KB Fina, which is a joint venture between G-Group and South Korean KB Financial Group. KB Financial Group invested VND425 billion ($18.4 million) in Gpay through KB Securities, its representative in Vietnam.

Elsewhere, other startups including Vietnam-based proptech startup Rever is reported to be raising $8-10 million in the new funding round. Meanwhile, South Korea’s STIC Ventures-backed hotel booking platform Go2Joy Vietnam has raised $2.3 million in a Series A+ funding round led by HB Investments, as reported by newswire Dealstreet Asia.

Vietnamese startups such as VNPay, Tiki, Yeah1, and others began to rise in popularity in 2019, raising $1 billion that year. Investors have since returned to Vietnam in the second quarter of 2020 thanks to the recovery of the economy and positive GDP growth in the country.

Le Hoang Uyen Vy, CEO of Do Ventures, said this year’s investment prospects should be bright for Vietnamese startups, especially in healthcare and fintech.

She noted that Vietnamese startups mainly raise venture investment capital from South Korean, Japanese, and Singaporean funds, and there is a high potential to attract investment from American venture capital funds.

“Hopefully, after the pandemic, Vietnamese startups will secure more deals from global funds, and Do Ventures is committed to supporting Vietnamese startups during this challenging time,” Vy added.

In another case, domestic AI startup Palexy picked up $1 million in funding in December to help offline stores achieve e-commerce-like success through real-time consumer data. The round, co-led by Do Ventures and Access Ventures, will fuel Palexy’s expansion across Asia and the Middle East this year.

500 Startups, the most active venture capital investor in Vietnam, made 15 new investments in 2020, increasing its portfolio to more than 70 companies. 500 Startups aims to reach its target of 80 companies invested in cumulatively in 2021.

“In the past five years, the tech entrepreneurial ecosystem has evolved even faster than we could have even imagined. And yet there’s still a lot of room to run and grow,” said Eddie Thai, general partner at 500 Startups. He cited a survey conducted in late 2020 about priority markets for venture capitalists in Southeast Asia. For the first time, Vietnam was ranked top, ahead of Indonesia.

The Hanoitimes – The project is the fourth in the energy sector signed between Vietnam and US firms over the past month.

A Vietnamese firm and General Electric (GE) Co. have signed a deal for a power project worth an approximate US$1 billion during the Hanoi visit by US National Security Adviser Robert C. O’Brien.

Vietnam, US firms sign the deal in the presence of APNSA O’Brien, US Ambassador to Vietnam Daniel J. Kritenbrink, and EXIM Kimberly Reed. Photo: US Embassy in Hanoi

On Sunday, GE signed the deal to provide equipment, services and equity to a liquefied natural gas (LNG)-to-power plant capacity 3,600 megawatts (MW) in the presence of O’Brien and Kimberly Reed, president and chairman of the Export-Import Bank of the United States (EXIM).

The signing of the Long Son LNG-to-power project was carried out by representatives from General Electric, GENCO3, Pacific Corporation, PECC 2, Mitsubishi, and TTC Group.

This project that is located in Vietnam’s southern province of Ba Ria-Vung Tau, will bring 1,500MW of clean power to Vietnam, strengthening Vietnam’s energy security and supporting its economic development.

Series of US-invested power projects within a month

This is the fourth LNG power projects signed by US investors over the past one month.

Late last month on the occasion of the 2020 Indo-Pacific Business Forum (IPBF) in Hanoi, Vietnam and the US signed memoranda of understanding (MoU) for three big LNG-to-power projects and one LNG terminal.

The first one is an agreement to provide equipment and services worth more than US$3 billion for a liquefied natural gas (LNG)-to-power project in Vietnam’s Mekong Delta signed by three American companies namely Bechtel Corporation, General Electric and McDermott.

The signing is aimed to utilize the best-in-class American technology and engineering from the US for the 3,200-megawatt Bac Lieu LNG-to-power project developed by US-headquartered Delta Offshore Energy.

Costing US$4 billion, this is the biggest foreign direct investment project in the Mekong Delta so far, scheduled to become fully operational by the end of 2027.

The second one is preliminary agreement signed between General Electric and VinaCapital, a Vietnam-focused venture capital firm, for the development of the Long An LNG-to-power project in the southern province of Long An. Under the MOU, GE will supply gas turbines and other equipment.

VinaCapital is in partnership with the Long An provincial government to develop the project that will have a power generation capacity of 3,000MW, intended to replace a proposed coal-fired power project that was abandoned due to environmental concerns.

The third one is between AES Corp. and Petro Vietnam Gas (PV Gas) for a joint venture agreement to develop the Son My LNG Import Terminal Project for about US$1.4 billion. The terminal will have a capacity of 3 million mt/year of LNG in the first phase, which would be doubled to 6 million mt/year in the second phase.

Son My LNG will supply gas to the 2.25 GW Son My 1 and 2.2 GW Son My 2 power plants from 2024. AES had signed an agreement with the Vietnamese government to build the $1.8 billion Son My 2 combined-cycle gas turbine power plant last year. Son My 1 will be built by a consortium led by France’s EDF.

The fourth project is a MoU for ExxonMobil Haiphong Energy Pte Ltd (EMPHE), Hai Phong People’s Committee and Japan power generation company JERA to work together on a potential integrated LNG to Power project in Haiphong.

The cooperation is aimed to expand on their strong cooperation and exchange of expertise to jointly study natural gas market development opportunities, including LNG import facilities and gas-fired power plants.

The Hanoitimes – Vietnam is committed to opening the financial market to foreign investors, particularly in financial services.

The Vietnamese government would consider reducing state ownership at four major state-run commercial banks (BIDV, Vietinbank, Vietcombank, Agribank), which account for 50% of the total credit supply in banking sector, to 65% by 2025, according to Deputy Prime Minister Vuong Dinh Hue.

Deputy Prime Minister Vuong Dinh Hue (r) President of Warburg Pincus Timothy F.Geithner (l). Source: VGP.

Hue shared the view in response to a suggestion from President of global private equity firm Warburg Pincus Timothy F.Geithner to raise foreign ownership limit in commercial banks to attract foreign investment and support the development of cashless payment initiative in Vietnam.

Vietnam is committed to opening the financial market to foreign investors, particularly in financial services, in compliance with the country’s commitments in multilateral and bilateral trade agreements, said Hue in a meeting with Geithner on December 17.

Hue expected Warburg Pincus to expand investment in Vietnam’s priority fields, including infrastructure, hi-tech, new materials, renewable energy, supporting industries, IT, among others.

To meet demand of foreign investors, the government plans to revise the Investment Law and the Law on Enterprises regarding the non-voting depository receipts (NVDRs), allowing foreign investors to increase their ownership and better control risks.

These two bills are scheduled to be submitted to the National Assembly for discussion and approval in May 2020, said Hue.

According to Hue, the government is planning to issue a regulation on “golden share”, which would be owned by the state and give its owner veto power over changes to charters at state-owned enterprises and commercial banks.

Hue expected the move would encourage the participation of private investors in developing Vietnam’s credit and payment systems.

Warburg Pincus’ first-ever investment in Vietnam was a US$200 million funding for Vincom Retail, the mall operator of Vietnamese conglomerate Vingroup, in 2013. The firm with US$40 billion assets under management has injected a US$100 million follow-on investment in Vincom Retail in 2015. Its highly successful US$740-million listing on the Ho Chi Minh City Stock Exchange in November 2017 was the largest-ever IPO in Vietnam at that time.

Warburg Pincus also linked up with Vietnam’s VinaCapital to invest up to US$300 million in a hotel venture Lodgis Hospitality in November 2016.

In March 2018, Warburg announced a US$370 million investment in Techcombank. Three months later, it joined hands with Becamex IDC to establish a US$200 million logistics and industrial real estate investment joint venture.

In the first quarter of 2019, the New York-based private equity invested in MoMo electronic wallet to tap into the country’s fintech market. The fund also eyed the luxury resort Grand Ho Tram located in the southern province of Ba Ria-Vung Tau in Vietnam.