Startups in Vietnam secured 134 deals with venture capital investment of $634 million in 2022, down 19% and 56% year-on-year respectively, according to the Vietnam Innovation & Tech Investment Report 2023.
The report, released by Do Ventures and Vietnam National Innovation Center (NIC) on Thursday, said the sharp decline in venture capital was partly due to the profound impact of global turbulences, including financial uncertainty and market volatility.
Do Ventures is an early-state venture capital firm focusing on information technology (IT) companies in Vietnam and Southeast Asia, while Vietnam National Innovation Center (NIC) belongs to the Ministry of Planning and Investment.
The report noted that the total value of deals worth from $10 million fell to $423 million, or one-third of that in 2021, accounting for 67% of the total figure in 2022. The total value of deals below $10 million edged down slightly to $211 million, or about 33%.
In Southeast Asia, Vietnam retained its third rank in terms of deals done, with 16% of the region’s total, after Indonesia with 26% and Singapore with 39%.
For deal value, the country dropped to fourth position with 8% of the regional total, after Indonesia with 44%, Singapore with 27%, and the Philippines with 9%.
Financial services was the biggest attraction to venture capital in Vietnam last year with $214 million, and the only sector with increases in funding, from $61 million in 2021.
Retail saw the second-highest level with $204 million, down 57% year-on-year from $469 million in 2021.
Vietnam recorded 137 funds investing in startups in 2022, of which 30 are local ones, accounting for the biggest portion for the first time, followed by Singaporean ones with 29 and North American ones with 19.
Local venture capital firms play an increasingly important role in Vietnam’s startup ecosystem, with 61 deals worth $287 million last year, a record high in terms of value.
Investors will continue to disburse funds into innovative companies in Vietnam in line with their long-term vision and belief that challenges can present opportunities, the report noted.
At the Vietnam Venture Summit 2022 last December, 39 venture capital funds vowed to pour $1.5 billion into innovative startups in Vietnam in 2023-2025, as part of the country's effort to attract funds totalling $5 billion in the period.
Minister of Planning and Investment Nguyen Chi Dung urged funds, corporations and startups to cooperate with the ministry in drawing up a draft law on venture capital and mechanisms on establishing a private fund to support innovations. He emphasized venture capital funds and innovative businesses are key partners of the Vietnamese government in improving the country's business environment.