While Covid-19 has caused three-quarters of startups in most countries to pause due to a lack of investment capital in the short term, many Vietnamese startups have experienced strong growth and attracted millions of US dollars in investment despite the pandemic.
Survival challenge
The Covid-19 pandemic has become a severe challenge for most industries and businesses. Since early this year, about 59,800 businesses have stopped operation, an increase of 23 percent over the same period in 2020. Despite this gloomy picture, Vietnam’s startup ecosystem is still developing and becoming more vibrant than ever. Many startups in Vietnam have announced successful fundraising of millions of US dollars in 2021.
In January, MoMo announced completion of the fourth round of fundraising (series D) from world investors, including new investors and investments from Goodwater Capital, Kora Management and Macquarie Capital, as well as existing shareholders Warburg Pincus, Affima Capital and Tybourne Capital Management. In the series D round, according to the agreement between the parties, MoMo does not announce the amount of investment received. However, a source told Bloomberg that the total value of investment in this round was more than US$100 million.
In early June 2021, KKR, a world top-three investment fund, announced an investment worth US$100 million in the EQuest Education Group. EQuest is the third company in Vietnam to receive investment from KKR, after Vinhomes and Masan MEATLife.
Before that, the English learning app ELSA successfully raised US$15 million from the Vietnam Investments Group and SIG. Meanwhile, VNG, Vietnam’s largest game company, announced a US$6-million investment in Got It, a luxury corporate gifting company.
Although the Covid-19 pandemic has slowed startup investment flows, according to venture capital funds, Vietnam is still a top priority market in Southeast Asia in 2021. Vietnamese startups have attracted US$290.43 million since early this year. At a Vietnam startup investment fund forum held in late 2020, 33 investment funds committed to pouring more than US$810 million into startups in Vietnam between 2021 and 2025.
Pham Hong Quat, Head of the Ministry of Science and Technology’s National Agency for Technology Entrepreneurship and Commercialization Development, said Vietnam’s startup ecosystem has developed impressively, becoming a leader in the region and attracting the interest of international investment funds.
Many international speakers and experts have praised Vietnam’s startups, which failed but tried again and succeeded, Quat said.
Seeking sustainable development
According to Quat, Vietnam will upgrade, amend and supplement a national project for startup promotion to 2025 (Project 844) to help startups develop. The project will include policies on direct assistance for startups. Vietnam will pilot new policies (including those on capital mobilization from the community) and startup investment clubs, Quat said. The National Agency for Technology Entrepreneurship and Commercialization Development will strengthen international cooperation to help startups attract investment and develop markets, he added.
Nguyen Xuan Vinh, founder of FoodHub, a technology startup providing e-commerce solutions for clean food, said his app attracted 18,000 users before the pandemic and the number of users increased by 7,000 after two weeks of social distancing. The number of FoodHub users is growing 200-300 percent, and the app has been ranked among the top 10 most downloaded on Apple Store.
Before the pandemic, a number of big foreign startups, including WeWork, Greensill and Katerra, and Vietnamese startups (The Kafe, WeFit, and Soya Garden) implemented a “growth at all costs” strategy. They experienced accelerated growth and then collapsed.
Founder and CEO of Think Zone Ventures Bui Thanh Do said Vietnamese startups have recently focused more on core values, instead of creating a simple purchase and sale model, and using investment funds money to grow. They now focus on developing and applying leading advanced technologies that can help them develop on a sustainable basis in the long run.
Deputy General Director of Viettel Telecom Nguyen Chi Thanh said most startups are now more careful and choose sustainable development models. They focus on core values to create differentiated values rather than following market trends, and technology is the key to creating those core values for most businesses.
“Startups should identify their core strengths and focus on developing and bringing them into play to create a difference. For example, a technology company should develop sustainable platforms and work to surpass its competitors in the same field,” Thanh suggested.
| According to Cento Venture’s forecast, Vietnam will soon become one of the strongest startup ecosystems in ASEAN (the Association of Southeast Asian Nations). This is not only a good sign and opportunity for Vietnamese startups but also is expected to help Vietnam’s economy achieve breakthroughs in the future. |
Nguyen Nga