Vietnam expects $800 million in startup investments this year

Vietnam Expects $800 Million In Startup Investments This Year

Vietnam’s startup sector is growing at a rapid pace despite the global economic slump, closing up to regional leaders Indonesia and Singapore.

According to joint research by Ho Chi Minh City-based venture capital ESP Capital and Singapore’s Cento Ventures, startup investment in Vietnam hit $246 million this year through June on 56 deals, Nikkei Asian Review reported.

Investment is expected to top $800 million by the end of the year, which would represent a rise of at least 80 per cent over last year’s $444 million.

A total of about $5.9 billion was invested in Southeast Asian startups in the first half of 2019. When it comes to the investments that can be tracked to a destination country, Vietnam accounted for 17 per cent of startup investments in the region, up from five per cent for all of 2018, behind Indonesia at 48 per cent and Singapore at 25 per cent.

Startup investment in Vietnam began to rise last year, with the online retail, payments and education sectors attracting huge capital injections.

Among startups that raised the lion’s share of funding last year was e-payment app Momo, which pulled in about $100 million from US-based private equity company Warburg Pincus, making it one of the largest single rounds ever raised by a Vietnamese startup.

This year, e-commerce platform Tiki received a large injection of funds, according to research by ESP-Cento, though the company has yet to disclose the funding. Tiki was reportedly set to raise $75 million in March from investors led by Singaporean private equity company Northstar Group. Payment solution company VNPay raised $50 million from Singaporean state fund GIC, while gaming operator VNG received $29 million from Temasek Holdings.

Smaller startups are also being established. Luxstay, a room sharing startup like Airbnb, raised $4.5 million in May and point-of-sale system operator KiotViet received $6 million in August, according to startup database Crunchbase.

“Vietnam is in an important period when key components of a strong digital economy are beginning to shape up,” the research report noted. It said that Vietnam’s digital economy will benefit from its young population, of which 60 per cent are aged under 35, and a still-growing mobile and Internet penetration rate. The forecast is that over ten million more Vietnamese consumers will go online by 2023.

Vietnam also has a highly educated workforce – the country’s pupils ranked eighth globally in the PISA international science test, higher than Hong Kong’s and South Korea’s. Coupled with a relatively low labour cost, Vietnam has long been a software outsourcing hub in Asia, producing large homegrown IT companies such as FPT.

Overseas-educated entrepreneurs are also helping to shape the startup ecosystem in Vietnam. Silicon Valley-based education startup Elsa, run by Stanford-graduate Vietnamese CEO Vu Van, has about half of its 40 staff in Ho Chi Minh City to grow its English-learning app business in her home country.

Government support, through accelerator and incubator programmes, has also been contributing to the country’s startup ecosystem which is seen as a key driver for the Vietnamese economy.

Southeast Asia’s startup space has been led by Indonesia and Singapore, which claim six of the eight regional unicorns – unlisted startups valued at $1 billion or more. Vietnam, however, “certainly has the potential to establish itself as Southeast Asia’s next leading startup ecosystem,” the research noted.

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Vietnam's startup sector is growing at a rapid pace despite the global economic slump, closing up to regional leaders Indonesia and Singapore. According to joint research by Ho Chi Minh City-based venture capital ESP Capital and Singapore’s Cento Ventures, startup investment in Vietnam hit $246 million this year through June on 56 deals, Nikkei Asian Review reported. Investment is expected to top $800 million by the end of the year, which would represent a rise of at least 80 per cent over last year’s $444 million. A total of about $5.9 billion was invested in Southeast Asian startups in the...

Vietnam Expects $800 Million In Startup Investments This Year

Vietnam’s startup sector is growing at a rapid pace despite the global economic slump, closing up to regional leaders Indonesia and Singapore.

According to joint research by Ho Chi Minh City-based venture capital ESP Capital and Singapore’s Cento Ventures, startup investment in Vietnam hit $246 million this year through June on 56 deals, Nikkei Asian Review reported.

Investment is expected to top $800 million by the end of the year, which would represent a rise of at least 80 per cent over last year’s $444 million.

A total of about $5.9 billion was invested in Southeast Asian startups in the first half of 2019. When it comes to the investments that can be tracked to a destination country, Vietnam accounted for 17 per cent of startup investments in the region, up from five per cent for all of 2018, behind Indonesia at 48 per cent and Singapore at 25 per cent.

Startup investment in Vietnam began to rise last year, with the online retail, payments and education sectors attracting huge capital injections.

Among startups that raised the lion’s share of funding last year was e-payment app Momo, which pulled in about $100 million from US-based private equity company Warburg Pincus, making it one of the largest single rounds ever raised by a Vietnamese startup.

This year, e-commerce platform Tiki received a large injection of funds, according to research by ESP-Cento, though the company has yet to disclose the funding. Tiki was reportedly set to raise $75 million in March from investors led by Singaporean private equity company Northstar Group. Payment solution company VNPay raised $50 million from Singaporean state fund GIC, while gaming operator VNG received $29 million from Temasek Holdings.

Smaller startups are also being established. Luxstay, a room sharing startup like Airbnb, raised $4.5 million in May and point-of-sale system operator KiotViet received $6 million in August, according to startup database Crunchbase.

“Vietnam is in an important period when key components of a strong digital economy are beginning to shape up,” the research report noted. It said that Vietnam’s digital economy will benefit from its young population, of which 60 per cent are aged under 35, and a still-growing mobile and Internet penetration rate. The forecast is that over ten million more Vietnamese consumers will go online by 2023.

Vietnam also has a highly educated workforce – the country’s pupils ranked eighth globally in the PISA international science test, higher than Hong Kong’s and South Korea’s. Coupled with a relatively low labour cost, Vietnam has long been a software outsourcing hub in Asia, producing large homegrown IT companies such as FPT.

Overseas-educated entrepreneurs are also helping to shape the startup ecosystem in Vietnam. Silicon Valley-based education startup Elsa, run by Stanford-graduate Vietnamese CEO Vu Van, has about half of its 40 staff in Ho Chi Minh City to grow its English-learning app business in her home country.

Government support, through accelerator and incubator programmes, has also been contributing to the country’s startup ecosystem which is seen as a key driver for the Vietnamese economy.

Southeast Asia’s startup space has been led by Indonesia and Singapore, which claim six of the eight regional unicorns – unlisted startups valued at $1 billion or more. Vietnam, however, “certainly has the potential to establish itself as Southeast Asia’s next leading startup ecosystem,” the research noted.

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