The Vietnam Innovation and Tech Investment Report 2020 is published as a cooperative work between Do Ventures and NIC – a unit of the Ministry of Planning and Investment. This is the epitome of a successful collaboration between a private-sector venture capital firm and a government agency, both of which share the common goal of nurturing Vietnam’s innovation ecosystem.
Full report here.
In recent years, innovation has been considered a critical factor in speeding up Vietnam’s economic growth. In January 2021, the “National Strategy on the Fourth Industrial Revolution by 2030” issued by the Prime Minister was adopted with specific targets to fulfill goals set in Politburo’s Resolution 52-NQ/TW on a number of policies guiding Vietnam’s proactive participation in the revolution. This is an important milestone in the Government’s efforts to create a favorable business climate for both local startups and foreign investors.
The strong involvement of the Ministry of Planning and Investment and other related Ministries and agencies has contributed to the completion of many legal mechanisms to support and encourage innovation and entrepreneurship in Vietnam. Incentive policies, as well as processes regarding investment and divestment for foreign investors, have become more and more clearly regulated, making Vietnam one of the most attractive investment destinations in the region. Most notably, the Vietnamese Government is taking affirmative steps to develop the digital economy by initially deploying a regulatory sandbox for new industries such as Fintech. The report recognizes the efforts of the Vietnamese Government in creating the most favorable environment where innovative businesses, start-ups, and investors can thrive and join forces to make a significant contribution to the economy.
The report also provides an overview of the innovation and tech investment landscape in Vietnam with the following key findings:
Vietnam startup ecosystem stands on firm ground amidst challenges
As 2020 was a year of turbulence but also of resilience for global tech investment, the landscape in Vietnam was not an exception. The amount of capital invested decreased by 48% to $451M, mostly due to the absence of outsized deals that were already closed last year by later-stage companies. Nevertheless, the total number of deals fell only slightly by 17% as we recorded 60 deals in H2/2020, virtually equal to the same period in 2019. After the slowdown during the first quarter, venture capital investing began to pick up from the second quarter.
Local funds play a central role
The persistence of early-stage investments is significant to the health of the broader venture capital ecosystem. As more than half of the recorded deals were conducted by local funds, local capital availability in the Vietnam market has proved to be one of the key supports for early-stage entrepreneurs to keep thriving during these uncertain times.
Sector diversification continued
Payment and retail went on being the dominant sectors of large amount funding thanks to their fundamental roles in the growth of the Internet economy. Employment (HRTech) and real estate (PropTech) continued seeing rising interest, while education (EdTech), healthcare (MedTech), and business automation (SaaS) have gently gained favor from drastic changes in consumer and business behaviors.
Lasting interest from foreign investors
The interest in the Vietnam market was unwavering regardless of the global crisis, as the number of investors entering the country in 2020 went through only a minor drop compared to last year. The most active investors still came from Vietnam, Korea, and Singapore, while there was a remarkable fall in the number of Japanese investors.
Looking ahead to 2021
Though the Vietnam tech investment landscape experienced an inevitable hit due to the global crisis, Vietnamese entrepreneurs have done their best with available resources during an unprecedented time. Challenges could always be interpreted as opportunities that welcome the birth of new disruptive business models. Furthermore, the Government’s increasing efforts to foster the Internet economy and create a conducive business environment to attract foreign investors will stand Vietnamese startups in good stead when investment activities progressively resume at the normal pace.
As an agency that supports and nurtures the innovation ecosystem, Mr. Vu Quoc Huy, Director of the Vietnam National Innovation Center (NIC) said: “NIC is researching and proposing to develop a legal environment for innovation in Vietnam, as well as other specific policies, programs and regulatory sandbox to support innovative businesses. The cooperation between NIC and Do Ventures in co-publishing the Vietnam Innovation and Tech Investment Report 2020 is to equip investors with information about the innovation and tech investment activities in Vietnam, thereby enhancing both domestic and foreign capital inflows.”
Sharing her comments on the report, Vy Le, General Partner of Do Ventures, said: “The entire 2020 was brimming with challenges and the situation probably will not change soon. However, having worked in the field of innovation for a long time, we always see opportunity in every difficulty. Do Venture believes in the Vietnamese founders’ ability to rise above obstacles and bring in new values to society, and we are committed to always standing by their side to support them in important times.”
Vietnam National Innovation Center (NIC) is a unit under the Ministry of Planning and Investment, established by the Prime Minister in Decision No. 1269 / QD-TTg dated October 2, 2019, with the function of supporting and developing Vietnams startup and innovation ecosystem, contributing to the innovation of the growth model based on science and technology.
NIC’s vision is to become the leading regional innovation hub that enables the fundamental transformation of Vietnam’s future economy and brings the country to periods of rapid and sustainable development.
Do Ventures is a $50M early-stage venture capital fund that serves as a strategic partner for startups. Leveraging the current favorable demographic in Vietnam, Do Ventures seeks investment opportunities in technology startups with outstanding execution capabilities that can develop meaningful products and services that improve the lives of consumers in Vietnam and Southeast Asia.
With the philosophy of “Grow by Doing”, Do Ventures believes that for a startup to grow rapidly and outpace the competition, its founders must have an outstanding execution ability and be willing to do more to find out more opportunities to figure out the proper formula for sustainable development.