Vietnamese early stage startups show high potential but it is hard to find one that is investment-ready, opines Hajime Hotta, a prolific Japanese angel investor who set up Innovatube, a support programme for local engineers.
Hotta acts as the first backer and mentor for a number of Vietnamese startups which went on to secure funding from accelerators and venture capital funds. He is a serial entrepreneur and currently chairs video communication platform Cinnamon.
One of his investees is marketing platform Beeketing, which has undergone the acceleration programme of 500 Startups in Silicon Valley. Another is the “Pinterest for food and fashion” Lozi, in which Golden Gate Ventures and DesignOne Japan injected a series A round last year.
Other startups, from education to social media segments, that have got Hotta’s support also won prizes at a lot of startup competitions.
“Honestly, it is very difficult to find someone who can do the right thing with the minimum hands-on,” said Hotta. He and Truong Manh Quan, founder and CEO of Beeketing, made a lot of effort in business planning, to make it scalable that the US investor was interested in, although Beeketing had not previously looked like a big business.
Being an angel investor is quite time-consuming, says Hotta. “Just 10 per cent of the effort is to deliver my ideas, but 90 per cent is to convince the founders to follow my instruction. I have a lot of connections with VCs and serial entrepreneurs so I get immediate sense of what they should do. But to explain the ideas to them is quite difficult, otherwise they might not take it seriously.”
The Japanese investor pointed out the biggest weakness of Vietnamese startups is the fragmentation between business and tech talents. “They are not strongly connected,” he said.
However, Hotta believes this can be fixed, as he is seeing a lot of local engineers coming to startup events to adopt a new mindset. He is positive that among the Southeast Asian countries, Vietnamese startups can be a rule breaker to reach a regional or even international scale.
Angel investment synergies
Innovatube is one of the latest initiatives launched in Vietnam to help boost the quality of startups. But unlike other entities, which try to give incubation or meetups, Innovatube’s main purpose is to support the engineers to understand the business angle. Besides angel investing, Hotta aims to broaden his support to the community in Vietnam by bringing helpful knowledge to founders.
When he first came to Vietnam three years ago, the scene was a lot different, according to the angel investor. “The business people have changed over time, the community is expanding and more engineers are willing to learn. There are hundreds of engineers coming to each Innovatube’s sharing events,” Hotta said.
Giving his perspective on forming an angel investment club, which Vietnamese angel investors are trying to put together, Hotta thought it was an encouraging idea to raise the resources from a lot of wealthy businessmen from real estate or other industries, who would need to be educated on finding good startups.
“However, to form and operate an angel investment club, the local angel investors are required to be very experienced,” he concluded. Investing is ultimately the change in the form of fundraising and finally coming into exit. For angel investment, it is critical how to convince seed investors to invest. “As a nature of startups, the companies could fail several times, so sometimes the founders face a situation that they need to raise money without any traction with a higher valuation. This is where angel investors can actually play a role, so they must be really experienced entrepreneurs to support the startups appropriately.”