Vietnam currently has an emerging stage startup ecosystem. Through government initiatives, foreign investments, and a few local successes, Vietnamese entrepreneurs are starting to develop local startup communities
The first wave of growth began in 2000 with IDG Ventures in the country. IDG was the first major venture fund in Vietnam and put in usd$100 million to startups. The fund has invested in over 40 companies in tech, media, telecoms and consumer sectors across Vietnam.
A second large wave of growth occurred in 2008 when Cyberagent Venture made a few large investments in the country. Today, research suggests that there are approximately 700 startups across the country, with just a few of them largely popular and profitable.
Like many emerging markets, there are lots of great opportunities that are available in Vietnam and encouraging reasons to invest in the country’s startups.
- Government policy is quickly changing in favor of investments. While the government used to have a laissez faire attitude towards local and foreign startup investment, they are now taking a more active role to encourage funding and provide tax breaks and other incentives for investments.
- The culture of Vietnam is warm and relatively friendly to outsiders. In addition, the majority of successful startups in the country are founded by English speaking, foreign educated founders which makes it easier to confront the language barriers that can be challenging for foreign investors.
- Similar to much of SE Asia, Vietnam has a growing middle class and is mostly a population of young people; the average age is about 30 years old.
- The e-commerce industry group in Vietnam has said that the first stages of internet and e-commerce development is finally complete. Companies and investors can now expect strong technological infrastructure, technical talent and the initial frameworks of legal issues.
- The government now runs a relatively active Ministry of Science and Technology which is in place to support startups. While it doesn’t provide financial investment in the industry, it does initiate and help support investment partners and exposure, including attending conferences around the world, working with foreign governments and encouraging private foreign investments into the country.
Since the tech ecosystem is still small, there are a number of real challenges that startups face in the country.
- Talent: Most of the qualified and talented entrepreneurs are foreign educated-often in Europe or the US. These entrepreneurs are usually the Vietnamese who are returning to their home country to found a business. However, those who stay within Vietnam are often not given enough quality training in business, making it hard to found and run a successful company. While the local universities are producing qualified graduates in computer science and other technical areas, there is a dearth of business and entrepreneurship training.
- The startup ecosystem is relatively fractured. While there are a number of venture funds, incubators and co-working spaces available, these are mostly in Ho Chi Minh City and Hanoi. There is little available for the aspiring entrepreneur outside of these areas. Furthermore, within each city, the tech communities are relatively young, creating lots of opportunity for growth, but it can be a big challenge for young companies. For those looking to connect with the growing startup community, the best place to start would be at one of these popular co-working space.
- Language can be a deterrent and challenge for non-Vietnamese speakers looking to invest and start businesses in the country. Similar to other Asian countries, it is certainly easier to get a local partner however, unlike some other emerging markets, English is spoken by many of the larger companies and more notable entrepreneurs.
The future for the Vietnamese tech scene is exciting. This past year their tech conference, Techfest, was attended by over 1000 people and achieved usd$1.5 million investment funds. Startup community are sprouting up throughout HCMC and Hanoi and foreign investment is expected to grow with the new government incentives.