By Sharon Lewis and Bobo Chan *This article is the last of a five-part series on burgeoning digital economies in Southeast Asia. Part 1 | Part 2 | Part 3 | Part 4 Southeast Asia is home to stunning coastal vistas, delectable food, and a long history of cultural tradition. Today, however, Southeast [...]
Vietnam has undergone rapid technological growth and digital transformation over the past years. Investors at Vietnam Venture Summit 2020 look to add impetus to Vietnam’s startup ecosystem over the next three to five years with a US$800 million pledge.
An alliance of venture capital firms has pledged to invest US$800 million in Vietnam at the Vietnam Venture Summit 2020. The funds are aimed at bolstering Vietnam’s startup ecosystem in the next three to five years.
Names such as Monk’s Hill Ventures, 500 Startups, Quest Ventures – Vietnam Global Innovation, AlphaJWC Ventures, Beenext Ventures, Jungle Ventures, and Antler featured on the list.
A statement by Golden Gate Ventures noted that a total of 33 VCs (including itself) have made the funding commitment. These firms are from across South Korea, Japan, Singapore, Indonesia, and Vietnam, the statement said.
Investors pour in twice last year’s pledge at Vietnam Venture Summit 2020
The funding pledged this year is nearly twice the funds committed at the Summit last year. 18 investors had pledged to inject $425 million into Vietnam’s startup ecosystem over two years at Vietnam Venture Summit 2019. As of the start of 2020, about half, or $220 million had been disbursed.
The yearly Vietnam Venture Summit is co-organized by Southeast Asian VC Golden Gate Ventures and Vietnam’s Ministry of Planning and Investment. The Summit is a space for investors, founders and government officials to interact. It is part of The Vietnam Tech and Startup Week.
This year, the event took place as a hybrid offline and online event. It drew 2000 in-person delegates and virtual guests, and 500 international investors as well, the statement noted.
Vietnam’s tech boost and digital transformation lead the charge
The statement noted that Vietnam has seen growth in FDI as a result of the U.S.-China trade war.
With its position as a key manufacturer for companies such as Google, Samsung and LG, it is poised to absorb business from manufacturing units that are exiting China. It has so far benefited from $31 billion worth of business that has moved away from China, and can expect a strong rebound in its GDP next year.
The country already exports $100 billion in electronic goods annually, the statement noted.
“We’ve been invested in venture capital in Vietnam since 2011 but now, more than ever before, we’re really excited about the opportunities we’re seeing here. We look towards past experiences in China to draw parallels and access opportunities in Southeast Asia,” CIO at Dietrich Foundation Ed Grefenstette said.
“While talent used to be a bottleneck in Vietnam, we are seeing extraordinary best practices being adopted from around the world here,” he added.
The statement noted that the $800 million pledged at the Vietnam Venture Summit 2020 is expected to help Vietnam’s startup ecosystem regain its pre-pandemic momentum. Startup investments in 2019 reached $861 million with 92% growth year on year, the statement said, citing data from Do Ventures.
The country has landed some landmark deals of late. For instance, in 2019, Google announced that it would be shifting production of its Pixel phones from China to Vietnam. In the same year, Singaporean superapp Grab also announced that it would be investing $500 million in the country over the next five years.
Reports suggest that Taiwanese manufacturer Foxconn may move Apple iPad and Apple MacBook assembly units from China to Vietnam. The 2021 models of Apple’s AirPod and Airpod Pro earphones may also be manufactured in Vietnam.
Vietnam’s outlook on technological development is bullish. The country is one of the most digitally transformed Southeast Asian nation, will be rolling out 5G trials by 2021, and rose 13 places this year in a ranking of 100 economies having the best startup ecosystems.
There’s still a long way to go. Vietnam’s startup ecosystem ranks far behind Southeast Asian countries Indonesia, Malaysia, Singapore, and Thailand. Despite being the third most-funded Southeast Asian economy, the country is held back by its limited market reach.
Header image by David Peterson from Pexels