30.09.2021, 10:22

Spotlight On Vietnam’s Startup Ecosystem — A Dreamland For Venture Capitalists

After 10 years of operation in the e-commerce industry and serving hundreds of thousands of businesses across continents, OpenCommerce Group — formerly known as Beeketing - has built a passionate, enthusiastic, capable, knowledgeable and experienced team that helps online store owners grow and scale up. 

The goal of OCG is to create an ecosystem of products for e-commerce, and enhance the overall quality of e-commerce activities particularly in cross-border trade — quite a tricky endeavor for most small and medium-sized enterprises. Due to the differences in cultures, governments and laws, many businesses deal not just with logistical problems, but also with how they can enter foreign markets and ensure product quality shipping time, top customer service and stable cash flow.

Today, the technology startup’s gross merchandise volume has gone up to 13.8 times, and its personnel growth rate triples year after year.

But before it achieved success, OCG had to go through rough paths. From failed marketing campaigns to unforeseen market fluctuations, the startup tried all ways to survive, Ha Phuong Anh, Chief Revenue Officer at OCG, told Ruby Nguyen in a Vietnam Innovators podcast episode.


Beyond internal efforts, OCG is fortunate to have the support of investors who put their full trust into the startup. In the first phase of OCG, it garnered significant investments from angel investor Dr. Hajime Hotta (CEO of Cinnamon, entrepreneur Nguyen Thanh Nhan (CEO of Kalapa) and 500 Startups investment fund. It was OCG’s clear vision and its undeniable growth potential that drew investors in.

Like the OpenCommerce Group, all other startups need financial capital and entrepreneurial guidance from experienced investors or venture capitalists. A startup capital investment is necessary for that idea doodled on paper (or iPad) to become a reality. It’s needed to pay for office rents (when the team starts to grow), for business permits and licenses, for inventory and product development, and of course, for staff talent fees. 

In Vietnam, where dozens of tech startups have sprouted in recent years, a generation of innovators is starting to take the global spotlight. As a matter of fact, last month, four Vietnamese startups made it to Forbes Asia’s “100 to Watch” list, after they’ve proven resiliency and sustainable growth amidst the challenges of the COVID-19 pandemic. Many other startups were also able to secure multimillion-dollar fundings recently from foreign investors and venture capital firms.

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Gov’t encouraging entrepreneurship

In May 2016, Vietnam approved the “Initiative for the startup ecosystem in Vietnam until 2025” scheme — more commonly known as National Program 844 — to further promote the thriving startup ecosystem in the country. That year, which the Vietnamese government considered the “year of startups”, there were already around 1800 startups operating across the country, mostly technology-focused. Project 844, implemented through the Ministry of Science and Technology, was aimed at bringing about a comprehensive, timely and adherent demand-and-process assistance for these enterprises, and speeding up the main legal framework for the startup ecosystem.

To accomplish its objectives, National Program 844 focused on two missions: science and technology mission and annual mission. According to an article posted on startup.gov.vn, the goal of the science and technology mission is to research, suggest new mechanisms, policies and make adjustments to necessary legislation that would advance the startup ecosystem. Two to three years are the time set for research and collection of comments, recommendations and criticisms among related partners, thereby completing the policy proposals that are closely in line with the demands of the market and the ecosystem.

The annual missions play a role as direct support to the ecosystem of National Program 844. Categorized into six groups of tasks with different goals, the yearly mission will provide the start-up ecosystem with an all-round support, specifically: development training and capacity building; incubation and acceleration support; enhancing communication through events; communicating for entrepreneurial activities, assistance and investment; establishment and development of networks; and connecting local enterprises to regional and global supporting organizations and venture investors.

Since the program kicked off, the country has seen massive growth, both in terms of new startups sprouting and the revenues they’ve generated. Last year, Vietnam emerged as a regional startup hub in Southeast Asia with investments worth US$815 million at the Vietnam Ventures Summit. In the first half of 2019, Vietnamese startups raised US$246 million, with startups such as Tiki, VNPay, and VNG capturing 63% of these deals. 

In the first half of 2021, Nextrans Vietnam reported that the total value of investments in startups reached more than $100 million — that’s about a 34% year-on-year increase, excluding unpublished investments. 

Source: Shutterstock

Dreamland for venture capitalists

With all this visible growth and endless potential for Vietnamese startups to lead Southeast Asia’s flourishing business landscape, Vietnam is highly seen as a dreamland for venture capitalists. 

Golden Gate Ventures, in its recent Southeast Asia: Startup Ecosystem 2.0 report, noted that Vietnam has already started solidifying its presence in the region. In 2022, the number of Southeast Asia-focused venture capital funds pouring financial support into early-stage Vietnamese startups is expected to expand. Players in e-commerce, financial services, online media, online travel and food and transport industries will catch foreign investors’ attention, added the report.

Social commerce gross merchandise value will cross $5 billion in 2025 and $25 billion by 2030 due to a continued rise in e-commerce adoption. Media and entertainment startups, meanwhile, will gain stronger support as Vietnam and the region shift into a digital-first society. Funding for this sector will reach $700 million by 2030.

Investment funds, including CyberAgent Capital, 500 Startups, AlphaJWC, Monk’s Hill Ventures and Access Ventures, are also seen to drive tech investments in the coming years.

As major commercial cities like Hanoi and Ho Chi Minh City continue to enforce projects to support the country’s desire to become a regional (or even global) innovation hub, and as startup founders and investors continue to seal deals for business opportunities that are in line with their visions and long-term goals, Vietnam’s startup space will become more than just a dreamland for investments — but a venture capital world of its own.

The program “Initiative for Startup Ecosystem in Vietnam until 2025” (also known as National Program 844) was approved by the Prime Minister on May 18, 2016 and assigned to the Ministry of Science and Technology of Vietnam in charge of implementation. The program aims to create a favorable environment to promote and support the formation and development of fast-growing businesses based on exploitation of intellectual property, technology, and new business models.

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