Vietnam’s tech startup scene has continued to attract venture capital (VC) investments, pushing the country further towards its aim of becoming a fully digital society by 2030.
South Korea-based Shinhan Venture Investment is planning to increase its Southeast Asia focus with the $200-million flagship global fund that it completed raising a few months ago, Nikkei Asia reported Wednesday.
Of the flagship fund, around 50% will be allotted to Southeast Asia, 30% to the U.S. and other countries and 20% to South Korea, JinSoo Lee, head of global investment at the fund told the Japanese newspaper.
"We are focusing on Southeast Asia, especially Indonesia, Singapore and Vietnam. We are sector- and stage-agnostic, and our investments span from seed to pre-IPO. Our strength is that we can leverage our subsidiaries, such as banks, insurance and credit cards in Vietnam, Indonesia and Japan to support our founders and help them expand to other regions,” he said.
The Shinhan global flagship fund has already closed a few deals in Southeast Asia, including one for Singapore-based Speedoc, Indonesia's aquaculture startup eFishery and insurtech specialist Pasarpolis, Nikkei Asia reported.
The fund’s limited partners include Shinhan Bank, Shinhan Card, Shinhan Investment Bank, and Shinhan Life.
In February, VinaCapital Group’s technology investment arm VinaCapital Ventures announced it was investing $1 million in Koina, a Vietnam-based data-driven farm-to-business agriculture technology platform.
Hoang Duc Trung, partner at VinaCapital Ventures, explained: “Koina’s mission is to be an innovative hub in Vietnam’s agriculture sector. With the Vietnamese government promoting green, environmentally friendly agriculture, we hope to play a part in improving the supply chain and Vietnamese farmers’ lives.”
As per the national strategy on digital transformation announced in 2020, the digital economy’s share of gross domestic product will increase to 20% by 2025.
Vietnam hopes that focusing on digital economy growth will help it realize its vision of becoming a high-income economy by 2045.
This is backed by the World Bank, which says: “If digital sectors expand by about 10% every year, the cumulated monetary gains for the Vietnamese economy will exceed $200 billion over 2021-2045, or about the size of the country’s current GDP.”
In 2021, new startup support centers were announced in Hanoi, Danang and Ho Chi Minh City. A year later, a roadmap for boosting innovation in science was revealed, with promises to spend 1% of GDP on scientific research. Another announcement said business innovation surveys would be introduced to monitor the development of startups.
A recent report by venture fund Do Ventures and the National Innovation Center, a unit under the Ministry of Planning and Investment, says Vietnam’s startups attracted a lot of investor interest in 2022. Do Ventures is an early-stage venture capital firm that focuses on making investments in information technology companies in Vietnam and Southeast Asia.
The report ranked Vietnam third in the region in terms of deal count and fourth in deal value last year.
Notably, domestic funds were top investors in local startups last year, accounting for 45% of the total deal value. Ranked by aggregate value, Vietnam fell to fourth position with 8% of the regional total, following Indonesia’s 44%, Singapore with 27%, and the Philippines with 9%. It is worth noting that Singapore and Indonesia had much later-stage investments and little seed/pre-seed, while Vietnam’s seed levels were strong.
Fintech, retail, healthcare, and payments were the most in-demand sectors for funding.
However, total investment in Vietnamese startups was just $634 million in 2022, down 56% from the record high of $1.4 billion in 2021, the report noted.
Deals completed in early 2022 included Sky Mavis with $150 million, OnPoint with $50 million, and Timo with $20 million.
In a recent KPMG-HSBC joint study on Asia-Pacific’s technology-focused startup scenes, Vietnam was ranked one of Asia’s newest and most dynamic.
The number of startups, around 1,600 at the beginning of the pandemic, nearly doubled to 3,000 by the end, including four unicorns: electronic payment solutions provider VNPay; gaming startup-turned-conglomerate VNG; smartphone e-wallet Momo; and blockchain player Sky Mavis, the maker of NFT-based game Axie Infinity.
Other heavyweight names include M Village, which offers co-living housing for young professionals, and TopCV, which focuses on resume creation tools for job-seekers.
Major domestic VC funds
According to Preqin, a privately held London-based investment data company that provides financial data and insight on the alternative assets market as well as tools to support investment in alternatives, the three largest Vietnam-focused VC funds that closed their raising rounds between 2021 and 2022 are the following:
AVV Alpha ($64 million)
HCMC-based Ascend Vietnam Ventures (AVV) closed its flagship, early-stage VC fund AVV Alpha at $64 million in June 2022, exceeding its original target of $50 million.
The fund, dedicated to Vietnam, will seed up to $2 million into 25 start-ups, in verticals like blockchain, edtech, fintech, gaming, SaaS (software as a service), wealth management, and wellness. AVV is supported by IFC, the private-sector arm of the World Bank Group.
ThinkZone Fund II ($60 million)
Accelerator and VC firm ThinkZone Ventures raised $60 million in February 2022 solely from Vietnamese limited partners; a task rendered very difficult during the pandemic, when overseas outreach became challenging due to travel restrictions.
The fund is set to invest in pre-seed to Series A rounds in fintech, edtech, and e-commerce in Vietnam. Its limited partners include local conglomerates such as IPA Investments, Corporation, Phu Thai Holdings and Stavian Group.
Do Ventures Fund I ($50 million)
Do Ventures raised $50 million in its first fund from South Korean internet leader Naver, Sea (the parent company of Garena and Shopee), and Singapore-based Vertex Holdings.
The fund’s investment targets include business-to-customer and business-to-business platforms, early-stage Vietnamese startups, and it helps traditional businesses digitize faster.