VIETNAMESE STARTUPS 'CAN'T RELY ON TV TO SUCCEED'

Ho Nguyen Thao

(Saigon Times) – Last year, the capital flow for Vietnamese startups dwindled to just $541 million, a
sharp decline from the peak of over $1.9 billion in 2021. Vietnamese startups not only compete with
their ASEAN peers but also face pressure from foreign rivals on home turf.

Access to provincial startup programs is challenging, prompting Vietnamese startups to increasingly seek
foreign capital. Development support programs from foreign countries for startups are also attracting
attention.

Southern Land Remains Promising...

In March 2023, Silicon Valley Bank (SVB) – a bank for startups in Silicon Valley, USA – unexpectedly
collapsed. Around the same time, Vinnie Lauria, a co-founder of Golden Gate Ventures, drew attention
as he rode a motorbike with his two kids through Ho Chi Minh City's bustling streets.

Lauria, an American entrepreneur, had moved to the city after working for a long time in San Francisco
and Singapore. He believed that Vietnam would become a regional hub and a global growth driver
within the next decade. However, he also warned that global investors were acting irrationally, like
children, making fundraising more difficult in such an environment.

Vietnam is fiercely competing for every venture capital dollar with many Southeast Asian rivals amid a
global funding winter. According to Tech in Asia, Vietnamese startups are on a downward trend in
fundraising, from over $1.9 billion in 2021 to $940 million in 2022, and just $541 million last year,
consistently trailing behind Singapore and Indonesia. This trend reflects investor interest and the
opportunities they see in the Vietnamese market.

Vietnam is considered the third link in Southeast Asia's golden startup triangle, alongside Singapore and
Indonesia. However, Startup Blink ranked Vietnam fifth among Southeast Asian startup markets in 2023,
while Startup Genome listed Ho Chi Minh City among the top 100 emerging startup ecosystems.

Ho Chi Minh City has the potential to become Asia's next Silicon Valley with its dynamic economy,
ongoing "golden population" phase, a wave of young people returning home after studying abroad, and
a strong entrepreneurial spirit passed down through generations. Additionally, many young foreigners
have chosen Thao Dien as their second home to start their businesses. "The tech community there is still
small compared to other places but vibrant enough," said Christine Van, an American of Vietnamese
descent handling public relations for several startups in Thao Dien.

The funding landscape in Ho Chi Minh City and Vietnam is vibrant, with 208 venture capital and private
equity funds in operation. Domestic investors are also playing a more active role than before. Le Hoang
Uyen Vy, co-founder of Do Venture, noted that a decade ago, investors might take up to six months to
decide on an investment in a startup. "But things have changed. If we don't decide within one or two
months, other funds will jump in," she said.

Changing Times
It seems that Vietnamese startups are expected to be resilient and survive many transformations. About
5,000 businesses close each month, but the number of startups listed on official portals remains around
3,800, possibly reflecting the peak fundraising period of 2021.

Not everyone knows that Vietnam's four unicorns (startups valued at over $1 billion) are now down to
three: the e-wallets MoMo and VNLife, and the blockchain startup Sky Mavis. Startups are shifting
across regions, choosing business models, work environments, and markets. New stars will emerge in
the startup sky, while some stars may dim or disappear altogether.

Forbes Vietnam predicts that the online fashion platform Coolmate, the electric bike company Dat Bike,
and the application KiotViet will be notable names in 2024. Tech in Asia identified 50 Vietnamese
startups to watch, ranging from the well-known F88 loan company ($188 million raised) and the ride-
hailing service Be (over $90 million raised) to those securing a few million dollars, with most around
$100,000. Many startups have chosen to keep their fundraising amounts confidential.

This paints an accurate picture of Vietnam's startup environment, which remains promising but not
entirely rosy, with some giants shrinking and smaller startups disappearing or relocating.

Stefanie Yeo from Tech in Asia predicted that fintech, electric vehicles, and web3 would be the focus
areas for startups in Vietnam in the near future.

'Talk Less, Do More' for Startups

Vietnam is very open to dialogue between the government, policymakers, investors, and the startup
community to identify market weaknesses, according to Nguyen Duc Long from the National Innovation
Center (NIC).

However, regulations are one thing; implementing them correctly is another. Issues like licensing in
localities, long-term visas for foreign founders or tech talent, and rules on stock options or convertible
loans remain challenges.

Almost no startups choose to pursue an initial public offering (IPO) in Vietnam. CEO Hong-Jin Kim of
Seoul-based Stic Investments noted at a tech investment conference in Ho Chi Minh City that this limits
investors' exit opportunities or share sales and makes transferring money abroad difficult. Due to these
regulations and startup sizes, IPOs in Vietnam are quite challenging.

Support for startups varies greatly across startup nations like Singapore, Israel, or Canada, including
funding, business expansion, market access, or visas for tech talent.

Although Ho Chi Minh City does not yet offer the same support as global startup centers, it remains a
promising land for startups, including foreign individuals and companies. Foreign startups are a
significant pressure on local young entrepreneurs, especially South Korean companies, as Ho Chi Minh
City is their second choice for starting a business in Southeast Asia, after Singapore.

The South Korean government has 15 support programs for SMEs to grow domestically and find markets
abroad. In the Diamond Plaza building, operated by Korea's Lotte Group, a large area is dedicated to two
Korean government organizations supporting businesses. KOTRA, the Korea Trade-Investment
Promotion Agency, and KOSME, the Korea SMEs and Startups Agency, offer free office space and
business opportunity information in Ho Chi Minh City and other Vietnamese provinces.
Pham Thi Huong Thao, CEO of F1Security – a cybersecurity company from Korea – told Saigon Times that
Korean startups can receive free office space at Diamond Plaza and business information. "When they
feel big enough, they can move out, but they won't be kicked out or cut off from support when they
leave." She noted that most startups here focus on IT and areas where Vietnam is less developed.

In October 2023, NIC inaugurated a modern facility worth VND 1 trillion at Hoa Lac Hi-Tech Park, Hanoi.
On April 3, the Ho Chi Minh City Department of Science and Technology announced that the city's
Innovation Startup Center would become operational, launching a platform to promote innovation
(HOIP) and organizing startup competitions.

However, practical support policies, such as free or heavily discounted office space, funding, or market
information, remain a dream for Vietnamese startups.

At a meeting between startups and Ho Chi Minh City leaders on March 28, attendees chose striking
phrases to express their wishes. Vu Kim Hanh, founder of the Green Startup Program in agriculture and
processing, used "No Action Talk Only – Don't just talk, make things happen." Phan Nhat Minh, director
of Gobi Partners, said, "Talk less, do more." Vinh Le, owner of the Zumwhere restaurant chain,
advocated for "Think big" in startups.

Starting Up on TV – Reaching for the Stars!

The idiom "buy on TV for a low price" or "borrow on TV for easy money and low interest" reflects the
contemporary notion of reaching for the stars.

When it comes to startups, money is essential, and foreign capital now seems more accessible than the
startup support programs every province offers. Even the venture capital on the reality TV show Shark
Tank Vietnam is often just for show, adding drama to the program.

Take Dat Bike as an example. In 2019, when founder Nguyen Ba Canh Son appeared on Shark Tank
Vietnam, the sharks harshly criticized him. Some called it "dangerous," while others dismissed the
startup as creating a product "that could be useful or not," doubting consumer demand. Yet, by the end
of 2022, the Da Nang-based electric bike startup successfully raised $8 million from foreign funds,
bringing the total to $16.5 million. Venture Cap Insights estimated Dat Bike's valuation at $32 million at
that time.

Last year, the Da Nang startup received funding from the UK government for a green startup project,
and HSBC provided additional capital to help bring Vietnamese electric bikes abroad. Domestically, Dat
Bike was also adopted by Gojek and Baemin (which has since exited Vietnam).

Many Vietnamese startups have appeared on Shark Tank Vietnam without securing funds or receiving
investments as quickly as negotiated on TV. Thus, many startups participating in the show do not place
much hope in the sharks' money. Personal savings, selling personal assets, borrowing from friends or
family, or luckily securing government funding from other countries seem more feasible than relying on
banks and domestic funds.