Investments into Vietnamese startups down by half in 2020

Vietnam has seen capital invested into local startups decrease by 48 per cent to $451 million in 2020 but showed resilience with good prospects to recover from the turbulence caused by the COVID-19 pandemic.

The figure was revealed in the Vietnam Innovation and Tech Investment Report 2020 by Do Ventures and the Vietnam National Innovation Center (NIC), a unit of the Ministry of Planning and Investment.The decrease is mainly attributable to to the absence of outsized deals that were already closed last year by later-stage companies.

“Nevertheless, the total number of deals fell only slightly by 17 per cent as we recorded 60 deals in the second half of 2020, virtually equal to the same period in 2019. After the slowdown during the first quarter, venture capital investing began to pick up from the second quarter,” said the report.

The persistence of early-stage investments is significant to the health of the broader venture capital ecosystem. As more than half of the recorded deals were conducted by local funds, local capital availability in the Vietnam market has proved to be one of the key supports for early-stage entrepreneurs to keep thriving during these uncertain times.

Accordingly, payment and retail went on being the dominant sectors of large amount funding thanks to their fundamental roles in the growth of the internet economy. Employment (HRtech) and real estate (proptech) continued seeing rising interest, while education (edtech), healthcare (medtech), and business automation (SaaS) have gently gained favour from drastic changes in consumer and business behaviours.

The interest in the Vietnam market was unwavering regardless of the global crisis, as the number of investors entering the country in 2020 went through only a minor drop compared to last year. The most active investors still came from Vietnam, South Korea, and Singapore, while there was a remarkable fall in the number of Japanese investors.

Though the Vietnamese tech investment landscape experienced an inevitable hit due to the global crisis, Vietnamese entrepreneurs have done their best with available resources during an unprecedented time. Challenges could always be interpreted as opportunities that welcome the birth of new disruptive business models.

Furthermore, the government’s increasing efforts to foster the internet economy and create a conducive business environment to attract foreign investors will stand Vietnamese startups in good stead when investment activities progressively resume at the normal pace.

Vu Quoc Huy, director of NIC said that NIC is researching and proposing to develop a legal environment for innovation in Vietnam, as well as other specific policies, programmes, and regulatory sandbox to support innovative businesses. The recently released Vietnam Innovation and Tech Investment Report 2020 aims to equip investors with information about the innovation and tech investment activities in Vietnam, thereby enhancing both domestic and foreign capital inflows.”

On the same note, Vy Le, general partner of Do Ventures, said that the entire 2020 was brimming with challenges and the situation probably will not change soon. However, there are always opportunities in every difficulty. In particular, it is the Vietnamese founders’ ability to rise above obstacles and bring in new values to society.

By Vietnam Innovation and Tech Investment Report 2020