Vietnam’s startup sector is growing at a rapid clip despite the global economic slump, as it closes the gap with regional leaders Indonesia and Singapore.
According to joint research by Ho Chi Minh City-based venture capital ESP Capital and Singapore’s Cento Ventures, startup investment in Vietnam hit $246 million this year through June on 56 deals.
Investment is expected to top $800 million by the end of the year, which would represent a rise of at least 80% over last year’s $444 million.
A total of about $5.9 billion was invested in Southeast Asian startups in the first half of 2019. When it comes to the investments that can be tracked to a destination country, Vietnam accounted for 17% of startup investments in the region, up from 5% for all of 2018, behind Indonesia at 48% and Singapore at 25%.
Startup investment in Vietnam began to rise last year, with the online retail, payments and education sectors attracting huge capital injections.
Among startups that raised the lion’s share of funding last year was e-payment app Momo, which pulled in about $100 million from American private equity company Warburg Pincus, making it one of the largest single rounds ever raised by a Vietnamese startup.
This year, e-commerce platform Tiki received a large injection of funds, according to research by ESP-Cento, though the company has yet to disclose the funding. Tiki was reportedly set to raise $75 million in March from investors led by Singaporean private equity company Northstar Group. Payment solution company VNPay raised $50 million from Singaporean state fund GIC, while gaming operator VNG received $29 million from Temasek Holdings.
Smaller startups are also being established. Luxstay, a room sharing startup like Airbnb, raised $4.5 million in May and point-of-sale system operator KiotViet received $6 million in August, according to startup database Crunchbase.
Backed by a large population of some 96 million and a healthy economic growth rate of 6.7% in the April-June quarter, more overseas investors are looking at Vietnam. Homegrown tech-driven services — in sectors such as e-payments, ride-hailing, e-commerce and logistics — are booming.
“Vietnam is in an important period when key components of a strong digital economy are beginning to shape up,” the joint research report noted. The report said that Vietnam’s digital economy will benefit from its young population, of which 60% are aged under 35, and a still-growing mobile and internet penetration rate. The research said that over 10 million more consumers will go online by 2023.
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