Vietnam startup ecosystem expects new unicorns

Third place in ASEAN

The term “unicorn” first appeared in 2013 to describe startups with high growth rates over a short time, valued at over US$1 billion. There are 326 unicorn startups in the world. In Southeast Asia, Singapore and Indonesia have nine and four unicorn startups, respectively. Vietnam’s only representative - VNG, reached the US$1 billion mark in 2014.

Although a second unicorn technology startup has yet to appear, Vietnam’s innovative startup ecosystem is showing promising potential for a breakthrough development in the near future. One such indication, provided in a study conducted by Google and Temasek (Singapore), is the growth of Vietnam’s digital economy to US$9 billion in 2018 and a US$30 billion forecast for 2025.

According to a report written by ESP Capital Report and Cento Ventures, within just two years, Vietnam’s creative innovation start-ups have risen to third spot in the Association of Southeast Asian Nations (ASEAN), just behind Indonesia and Singapore. Another report presented by the Australian Trade and Investment Commission also ranked Vietnam third in Southeast Asia in terms of the number of start-ups, which increased from 400 in 2012 to over 3,000 in 2019.

In the first 10 months of 2019, 29 announced deals attracted US$751 million, including large-scale investment in VNLIFE, the parent company of VNPAY worth US$300 million, which ranked first among the deals in fintech companies in Southeast Asia, even surpassing Singapore.

At the opening ceremony of the National Start-up Innovation Day (Techfest Vietnam) 2019, Minister of Science and Technology Chu Ngoc Anh said, “The growing scale of large investment shows the potential to create new unicorns is very realistic”.

He added that with the role of the state management agency in charge of innovation assigned by the Government, the Ministry of Science and Technology has cooperated closely with ministries, sectors and localities to implement specific plans to boost Vietnam’s creative innovation start-up ecosystem.

Motivating force for start-ups

In the past three years, a legal framework has been established for the national creative startup ecosystem to regulate innovative start-up activities and investment in innovative startups through the Law on Support of Small and Medium-sized Enterprises, and the 2017 Law on Technology Transfer. Pilot projects are also being developed and implemented.

One such project is known as a Sandbox, a fintech pilot institutional framework allowing a small number of businesses to test new technologies and business models in a practical and regulated environment within a limited scope and time.

In addition, intermediary organizations supporting innovation start-ups have experienced rapid growth in quantity, including 23 business promotion organizations, 38 start-up nurseries, and over 170 co-working areas with emerging brands in the world markets.

The creative innovation start-up movement has spread across the country and is approaching international level: 52/63 localities have issued plans and allocated resources to support startup activities, more than 300 events related to creative startups were organized and over 10 television programs on creative startups were broadcast nationwide. In addition, universities have established creative innovation centers and start-up support centers. Some universities have introduced the creative start-up subject into their curriculum, which will serve as a foundation for the establishment of successful innovation start-ups in the future.

The number of start-up investment funds has also increased rapidly with 61 funds now operating in Vietnam, including 10 domestic funds. There is also a sharp increase in participation of Korean and Singaporean investors in the Vietnamese ecosystem with 11 funds from Singapore and 13 from the Republic of Korea compared to only six funds of both countries last year.