Vietnamese tech unicorn VNG holds global ambitions

From a small gaming company founded by a group of enthusiasts, VNG Corp. became the first "unicorn" in Vietnam and is planning to expand across the global market.

In late August, VNG became the focus of attention when it announced that VNG Limited, which holds 49% of direct shares in VNG, had filed an initial public offering (IPO) on the technology-focused Nasdaq to the U.S. Securities and Exchange Commission (SEC).

In fact, the ambition to sail overseas has long been cherished by the “captain” of VNG. In 2010, in an interview with Forbes, VNG chairman Le Hong Minh shared his "dream", but it wasn't until 2017 the corporation made its first move: signing a preliminary agreement with Nasdaq for the IPO.

Journey to become "unicorn"

The birth of VNG is often used as an anecdote among technology and online gaming enthusiasts.

The journey of VNG (formerly Vinagame) started with Le Hong Minh, the owner of an internet shop. To satisfy his gaming hobby, Minh and a few friends had established a small internet cafe. Realizing the potential, he decided to quit his job at VinaCapital, one of the biggest investment fund management companies in Vietnam, and founded Vinagame with a charter capital of VND15 billion ($955,400 under the then exchange rate) in 2004 with four friends.

June 2005 was the first successful milestone for Vinagame when it signed a contract with Chinese tech giant Kingsoft to bring the game “Swordman Online” to Vietnam, paving the way for the era of massively multiplayer online role-playing game (MMORPG) in Vietnam. With 300,000 players at the same time within just one month from its launch, “Swordman Online” has put Vinagame among the major game developers in Vietnam.

From the success of “Swordman Online”, Minh's company continued to release other games in Vietnam. In 2006, Vinagame's revenue reached $17 million, six times higher than in 2005. To date, the entire system has released about 170 games covering more than 40 markets.

In 2009, Minh decided to change the company’s name from Vinagame to VNG JSC, partly affirming his determination to expand operations with four main segments: online games, connection platforms, electronic payments, and cloud computing services.

In addition to the gaming segment, VNG has expanded its operations to digital content and online entertainment, with a series of popular "Zing" products such as the music streaming platform Zing MP3, the social network Zing Me, and the e-magazine Zing News. Currently, Zing MP3 is now one of the leading online music streaming applications in Vietnam, while Zing News has been temporarily suspended.

Meanwhile, Zing Me was VNG's core product in the 2009-2012 period. In its heyday in 2011, Zing Me recorded 6.8 million visitors daily, two times higher than Facebook's 3.1 million at that time. However, because it only focused on gamers, it gradually became "weaker" than other social networks such as Facebook and Instagram. In 2020, VNG decided to close its social network.

Despite its failure, Zing Me helped VNG owners gain experience to launch Zalo - a messaging and calling application. This brand made its debut at the end of 2012, reached 10 million users in 2014, and entered foreign markets in 2016. Currently, Zalo is the number one messaging platform in Vietnam with 75 million monthly active users.

According to the Connected Consumer Q1 2023 released by the Mobile Marketing Association Vietnam (MMA) and Decision Lab, Zalo continued to be the most used messaging application in Vietnam, with a usage rate of 86%, followed by Facebook with 71%, Messenger 57% and Instagram 14%. In 2022, Zalo also led this ranking. Besides, it was included in the Top 20 most popular apps on the Apple Store for two consecutive years (2021 and 2022).

Along with the boom of the Zalo chat application, in 2016, VNG developed ZaloPay, which has become one of the most popular e-wallets in Vietnam. In 2022 alone, ZaloPay boasted 10 million regular users. On its official website, ZaloPay says it has affiliations with 39 banks, financial switching organizations, Grab Vietnam, and DNSE Securities Company.

However, not everything VNG has touched has turned to gold. The first e-commerce website, 123mua.vn, was transferred to Sen Do - a member of FPT Group, and it had to terminate Zing Deal and 123.vn. VNG admitted that it had learned many "bloody" lessons from the early days.

Building its fame from technology projects, VNG has also invested in a number of startups, including the e-commerce platform Tiki, the gift delivery platform Got It, and the tech-based logistics company EcoTruck. It has continuously poured capital into foreign startups and technology businesses to diversify its investment portfolio, as well as expand its product and industry ecosystem.

In 2021, VNG invested $22.5 million in Telio - Vietnam's first business-to-business (B2B) e-commerce platform. In February 2022, the company recorded an investment of $22.5 million in Funding Societies (known as Modalku in Indonesia). Then, VNG invested in Haegin - a company specializing in developing mobile games in South Korea. VNG also wants to expand in the international market, aiming to become a professional investor in the Metaverse (virtual-reality space) field. In addition, VNG and venture capital fund Do Ventures poured $7 million into the cross-border e-commerce startup OpenCommerce Group.

Thanks to these huge leaps, in 2014 VNG was valued at $1 billion by the World Startup Report, becoming Vietnam's first unicorn. Five years later, it was valued at $2.2 billion by Temasek Holdings – a global investment company owned by the government of Singapore.

But the ambitions of VNG owners have not been quenched. In the filing with the SEC, the founders have set a goal of turning VNG into a global technology company headquartered in Vietnam, a company with many global talents bearing Vietnamese identities such as independence, resilience, openness, and thirst for learning and development.

VNG reported after-tax profit of VND50.2 billion ($2.1 million) in the second quarter of this year, its first profit since the fourth quarter of 2021. VNG's net revenue reached nearly VND2.25 trillion ($94.6 million) in the period, up 12.4% year-on-year, according to the company's consolidated Q2 financial statement.

It has targeted revenue of VND9.28 trillion ($394.5 million) and a loss of VND572 billion ($24.3 million) in 2023.

VNG is registered on the Unlisted Public Companies Market (UpCOM) as VNZ, which was trading for VND835,000 ($34.26) per share on Friday.