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Vietnam third most active startup ecosystem in Asean

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Viettel, the largest Vietnamese state-owned corporation, has run and sponsored numerous start-up events. HOANG DINH NAM/AFP

Vietnam third most active startup ecosystem in Asean

Vietnam jumped from fifth to third in the list of most active start-up ecosystems in the six largest Asean economies in only two years.

The change was from the first half of 2017 to the corresponding period of this year, with the country trailing only Indonesia and Singapore.

According to the Vietnam Tech Investment Report released recently by Singapore-based venture capital firm Cento Ventures and Vietnam’s early stage venture fund ESP Capital, the amount of invested capital and the number of technology deals done in the country have grown six-fold in the period.

The report showed local start-ups raised a total of $246 million during the first half of this year.

Of which, the three largest investments, including Tiki, VNPay, and VNG, captured 63 per cent of the funding.

In terms of sectors, key blocks of the digital economy such as retail and payment accounted for almost 60 per cent of investment.

Multi-vertical companies are growing well and have captured a 12 per cent share of capital, while emerging sectors such as fintech, real estate and logistics are only just beginning to pick up in Vietnam, collectively taking a 10 per cent share of total capital.

According to the report, 2018 and 2019 have seen a new wave of Vietnamese start-ups that raised $50 million to $100 million rounds for the first time.

If this trend progresses, more Vietnamese companies could approach the $500 million and eventually $1 billion valuation mark in the years to come.

Between 2017 and 2018, most deals came from Singapore and Japan-based investors. This year, South Korean venture capital firms led as one of the most active investors during the year’s first half, having participated in almost 30 per cent of deals.

Notably, many of the Korean financiers invested in Vietnamese start-ups for the first time. Local investors were also active, with participation in some 36 per cent of deals.

The number of deals grew from 13 during the first half of last year to 21 deals in the same period of this year.

Enterprises also play an active role in Vietnam’s start-up ecosystem. For example, FPT has long provided investment support to local start-ups.

Last year saw Vingroup set up its corporate ventures capital (CVC), while other prominent corporations such as Masan and VietjetAir are considering similar initiatives, the report noted.

Banks like VPBank and TPBank provide preferential lending programmes for start-ups, while VPBank and UP Coworking offer free facilities for qualified companies.

Viettel, the largest Vietnamese state-owned corporation, has run and sponsored numerous start-up events such as Viet Challenge, IOT Hackathon, and Viettel Advanced Solution Track.

Vietnam has experienced a surge in both the amount of capital invested and the number of deals done since

the beginning of this year, with the 2018 fiscal year totalling $444 million, whilst the 2019 fiscal year is expected to reach $800 million.

Cento Ventures believes the amount raised during the second half of the year will be significantly higher than that of the first as several later stage companies that raised funds last year and early this year are in the process of closing another sizable investment round or expanding their current round.

The country shares similar trends with other Southeast Asian markets.

Online retail attracts a large portion of funding, while sectors such as financial services, real estate, and logistics are also gradually growing.

Multi-vertical companies are being formed as mature digital companies seek to expand outside their core business and are likely to attract an increasing share of funding in the coming years.

Simultaneously, differences exist. Education is among the country’s better-funded sectors. Payment firms continue to attract the majority of fintech investment as Vietnam continues to develop the necessary digital payment infrastructure. Viet nam news

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