The Flow will Grow: Why We're Excited About Vietnam

Dennis Le
January 20, 2022

Openspace has always had a pure-play regional focus in Southeast Asia and are excited by what we are beginning to see in the start-up ecosystems in Philippines, Thailand and Vietnam. To dig deeper, we recently sat down to have a conversation with the team overseeing Openspace’s activity on-the-ground in Vietnam to understand what’s going on.

We started by recognising that the country has seen a continued rise in venture investment, driven by a great macro story: large and growing consumer market, rising disposable income, population is relatively young and digitally savvy, high smartphone penetration, and abundant engineering talents. In addition: 

The start-up ecosystem in Vietnam is getting more mature and attracting significant venture capital funding into the country especially at the very early stage and at the late stage.
Vietnam provides ample inefficiencies and hence large opportunities for those founders to tackle
At the later stages, a small number of Vietnamese companies, which have spent the last decade building their infrastructure (fin-tech, e-commerce, logistics, etc.) are gaining the deserved attention from international investors.
Covid-19 has accelerated the adoption of various digital products (especially digital payment and e-commerce), thus creating an inflection point for digital infrastructure development and adoption in the country
The success of unicorns like VNG, VNPay, MoMo, Sky Mavis have definitely inspired the next generation of founders to set up their own businesses, as well as boosted the confidence of foreign investors in the country's local start-up ecosystem
At the very early stage, Vietnam is seeing a growing number of Vietnamese professionals either (1) coming from overseas during the Covid period, or (2) graduating from large tech companies (e.g. Grab, Gojek, Baemin, Shopee, Lazada, Tiki, etc.). 


We also discussed whether Vietnam has managed to shake of the image of it purely as a coding farm and establish itself as a start-up hotspot. Our team said that the general Vietnamese population now hear a lot about start-ups and various start-ups' success stories – perhaps more than they do about coding farms. The government has also been strongly promoting technology innovation and start-ups, meaning the country is continuing to building its image as a start-up nation.

One particular example: Sky Mavis (which is behind the success of Axie Infinity) has inspired a new generation of crypto game developers. The world is increasingly looking at Vietnam as the new hub for crypto gaming and NFTs

Vietnam is still behind Indonesia in terms of funding, but the country has its own unique selling points. And whilst capital flow might have been a challenge in the past, we expect the flow to grow in future. Today, the seed stage capital flow is growing; as these seed companies scale up to reach the Series A and B levels, and we expect them to be able to attract more capital to the mid stage level. The next 2-3 years will bean exciting period for Vietnam.

We also spoke about why it is so important to have local presence and experience within the start-up ecosystem, which is a key aspect of our commitment to invest with Active Intelligence.

 Vietnam is a highly complex market with ways of doing business that are unique to Vietnam.  These dynamics require a degree of local expertise, knowledge, and relationships. 

So, as we look forward, what do we see as the outlook for Vietnam and venture in the coming few years?

There will be more capital flowing into the seed stage as more and more capital founders join the ecosystem
Quality seed-stage companies will graduate to Series A and B and hence attract more significant funding into the ecosystem
Continued growth in some of the sectors Openspace are very focused on: fin-tech, crypto, retail (incl. e-/social commerce), agri-tech, health-tech.
There is active discussion for some of the larger Vietnamese tech companies to list onshore and offshore.  As these IPOs happen, these exit events will naturally draw more global investors to Vietnam.

Thanks to Dennis Le, Linh Thai and Jessica Huang Pouleur for their insights.

Photo credit: Discova