Vietnam is home to a strong and centralised startup culture with the main “hubs” being the major cities – capital city Hanoi, Da Nang and Ho Chi Minh City. There are many institutions that actively foster the startup ecosystem.
HATCH! Ventures is one such example – it runs an accelerator program, a co-working space and the annual HATCH! Fair. This event is now the largest annual entrepreneurship conference and startup exhibition with a mission to “support entrepreneurs and promote the early stage startup ecosystem”. In the 2 years since its launch, it has supported over 100 companies and facilitated 10,000 event participants. In 2016, it broadened its focus into community building activities, co-working spaces and incubation. Additionally, it rebranded as HATCH! VENTURES allowing for direct investment into startups.
TechFest is another event for the startup community. It is hosted by the Ministry of Science and Technology in partnership with other ecosystem players. The first TechFest held in 2015 attracted over 1000 people, 50 investors, 50 startups and a total of US$1 million in investments. These figures were doubled by the next year.
In comparison to other ASEAN countries, Vietnam has an unusually large amount of VC investors for a startup ecosystem that is still very much in its early stages. There is no shortage of seed and early stage investments in the startup pipeline. Between 2015 and 2016, the quantity versus the value of deals closed has moved in contrary motion. This shows that overall deals are larger and more concentrated with 7 of these exceeding $10 million. However, it is incorrect to disregard the smaller deals. 80% of deals closed in 2016 were under $5 million.
The main issue with a disproportionate amount of seed and early funding is that these startups are more likely to hit a roadblock in later stages. As such, startups in Vietnam hit their growth caps and generally struggle to achieve any greater scale because their product is limited to local demand. One such exception is VNG corporation – the only unicorn startup from Vietnam. The next highest valued startups are VC Corporation and Vatgia sitting in the $75 -150 million bracket. This valuation gap illustrates the growth challenges experienced by later stage startups.