VC investors excited by Vietnam's tech talent - AVCJ Forum

"It reminds me of Singapore five years ago when there was just one accelerator and investors were mainly family offices," Ryan Collins, a Southeast Asia-focused managing director with MassMutual Ventures, told the AVCJ Vietnam Forum. "But Singapore doesn't have a huge amount of tech talent and there seems to be an enormous amount of talent here. There could be some true tech companies – in areas like artificial intelligence and deep technology – coming through in a short period of time."

Corporates are already mining Vietnamese talent, with the likes of Samsung and Grab building out their local R&D capabilities in recent years. More of these programmers and engineers are expected to try their hand at start-ups, with some examples of teams spinning out from R&D hubs to launch their own businesses.

Carlos Camacho, head of investments development for private investment platform Fundnel, identifies three turning points in this journey. First, Flappy Bird, a mobile game developed by a Hanoi-based programmer, achieved more than 50 million downloads on the Apple store in 2014. "It gave confidence to developers," Camacho said. "It also gave regional and global investors the confidence that tech talent here is competitive."

Second, local digital content and e-commerce platform VNG Corporation signed a preliminary agreement to list on NASDAQ in 2017. And third, there has been a concerted ramp-up in government support for start-ups, including investment in incubation programs, tax breaks, and regulatory revisions that make it easier for VC investors to operate in the country.

These moves have already made a meaningful impact on the headline investment numbers. A total of $179 million was deployed in VC deals in Vietnam last year, nearly four times the 2017 figure, according to AVCJ Research. More than $110 million has been committed in the first five months of 2019.

Nevertheless, investor optimism is tempered by an appreciation of on-the-ground realities. Shane Chesson, a partner at Openspace Ventures, observed that "a lot of hard work" is required when looking at opportunities in areas like financial services, healthcare and education, where business models tend to mix online and offline elements.

"We have looked at almost 100 companies in the last five years and there can be operational challenges," he added. "Is there regulatory clarity? Is there sufficient quality in the team to go from start-up to massive business? Is there a technology baseline we can build on or do we have to rebuild it? We due diligence these areas heavily."

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• Topics
• Southeast Asia
• Early-stage
• Technology
• Vietnam
• AVCJ Events
• TMT
• Openspace Ventures
• MassMutual Ventures