Vietnam’s Start-ups Grow to Become a Game Changer in Southeast Asia

Aided by favourable government policies and foreign venture capital, Vietnam has become a major start-up powerhouse in Southeast Asia attracting foreign investors from all over the world.

The founders of these start-ups including designers, innovators, and developers are striving hard to establish a foundation that may one day become the most robust start-up industry in Southeast Asia.

For instance, GIMO, a Vietnamese start-up providing payroll services to blue collar workers, secured $4.6 million in funding led by venture capital firm TNB Aura early this year. GIMO is among scores of start-ups in the fast-growing Southeast Asian nation to attract international funding.

With around 3,472 startups, Vietnam is quickly becoming a destination for foreign venture capital looking to capitalise on an investment environment ripe with opportunity. These start-ups have been steadily increasing due to a young and motivated group of entrepreneurs who seem unstoppable.

Start-up trends in Vietnam

Vietnam currently spends about 1% of its GDP on innovation while most developed economies spend about 3%.

However, this did not deter Vietnam from becoming a major draw card of venture capital in the start-up sector. Among all sectors, fintech has been very popular and has attracted 1.013 billion worth of investment between 2013 and 2021.

Start-ups in the retail space too have been popular and they have received an investment of $902 million since 2013.

Although billions of dollars have been infused into the sector, these start-ups require more capital to run their operations and they are in the process of tapping various unfunded opportunities to realise their dreams.

HR in Start-ups

According to Vietnam Briefing, Vietnam’s startup sector still faces hurdles in meeting the human resources challenge notwithstanding the government’s all-out support to them.

An update from Adecco’s Vietnam Labour Market in Quarter 3 of 2022 found that IT enterprises need 530,000 workers to the meet the growing demand, but it is falling short by 150,000. This shortfall is expected to be around 195,000 by 2024.

This can be overcome if organizations are proactive in attracting and reducing the rate of attrition in the IT sector.

Some of the foreign Investors in Vietnamese start-ups include Singapore’s Antler Venture Capital firm, which one of the most prominent start-up investors in Vietnam.

Antler Vietnam has claimed that it has funds to the tune of over $30 million, has parked funds in more than 15 companies in several sectors such as education, real estate, and financial services.

Japan’s CyberAgent Capital has also opened an office in Ho Chi Minh City and funded well-known companies like Foody.vn and Tiki Corporation and smaller scale, early-stage startups.

Unicorn Start-ups

The US-based 500 Start-ups, which has opened its office in Ho Chi Minh City, is said to have funded more than 70 Vietnamese companies till June 2022 and they are from finance, banking, and fashion. The most well-known investment by 500 Start-ups was in Sky Mavis in Vietnam, which went to become one of the unicorns in 2021. The other unicorn start-ups are online gaming and social networking giant VNG, electronic payments app VNPay among others.

The Asian Development Bank (ADB) said that Vietnam has the potential to become a new technology unicorn in the future, with its existing foundations in the start-up ecosystem and technology industry.

With fintech at the forefront at 26.6%. Vietnam now has four unicorns, with a record investment capital of $1.4 billion, placing it in third place in the Asia Pacific region behind Singapore and Indonesia, ADB added.

Even the Vietnamese government has also acknowledged that technology firms are a new source of growth for the nation, and initiatives like Project 844 aim to develop 600 businesses by 2025.