500 Startups, one of the most active early-stage venture capitalists in Vietnam, is scouting for deals in sectors that have been underinvested in the country.
“Historically, we didn’t do a lot of healthcare tech or agriculture tech. And we want to do more,” 500 Startups Vietnam General Partner Eddie Thai told DealStreetAsia. “We’re spending a lot of time looking over, and being discerning about what areas that continue to plow ahead or even go faster than before.”
Thai indicated that there are a plethora of areas that will be digitized over the next 10-20 years. COVID has helped accelerate the trend for companies to go digital in sectors such as edtech and healthtech.
Thai also exuberated confidence in sectors such as fintech and SaaS and identified the tourism industry as a likely opportunity space post-pandemic.
Going forward, 500 Startups plans to increase its ticket size per investment to up to $2 million from $500,000.
“We’ll plan to increase our tickets. The largest ticket so far is half a million. And then I think if a new fund were to be raised, we would probably shift into half a million to $2 million,” said Thai. He, however, did not give any timeframe to launch the new fund since its existing $14 million micro fund has not yet been fully exhausted.
So far, as much as 80-90 per cent of the corpus of its $14 million micro fund has been deployed. 500 Startups currently doles out cheque sizes of $100,000-$250,000 per investment, higher than the amount it invested earlier. After the firm launched in 2016, it would typically invest in the range of $50,000-$100,000.
The $14 million corpus was raised in 2018 led by Thai and Binh Tran – the latter moved from the Silicon Valley to help lead the fund in Vietnam.
Guiding its portfolio companies
During the COVID-19 pandemic, 500 Startups Vietnam was one of the most active investors in Vietnam. It made 15 new investments in 2020, increasing its portfolio to over 72 companies mostly based in Vietnam (some companies are headquartered somewhere but serving here).
The startups it invested in during the pandemic in Vietnam are Bizzi.vn, an accounting automation tool, CoolMate, a direct-to-consumer menswear brand; Cricket One, an alternative protein; ProSpark, a learning platform for upskilling and reskilling the workforce in Southeast Asia.
According to Thai, when the pandemic struck, the firm immediately took stock of its portfolio companies, and tried to ascertain where its own position was in terms of business, cash flow, fundraising so that it could prioritize what it needed to do for them.
“We actually don’t prefer to invest money to save our company (portfolio). We believe that we can help them in other ways to save themselves. Next rounds of capital should be used for growth. Our focus on follow-on capital was for our better-performing companies,” Thai added.
He also said that one of its portfolio companies is aiming to close its Series B round over the next few months.
Recently, its portfolio, ELSA, an AI-based English learning app, raised $15 million in its Series B round co-led by VI (Vietnam Investments) Group and international investor SIG.
In Southeast Asia, 500 Startups manages two Durian funds with a combined corpus of $49 million that back regional startups., Besides it also has country-focused funds for Thailand and Vietnam. While Vietnam’s fund was oversubscribed and closed at $14 million, 500 TukTuks operating in Thailand is seeking to raise $20 million for its second vehicle, following a $15 million first fund.
500 Startups Vietnam also has an accelerator programme that it launched in partnership with Korean multimedia retailer GS Shop, which is also a limited partner in the 500 Startups Vietnam Fund. The accelerator, Saola Accelerator, has hosted 3 batches with a total of 17 startups including a mix of fintech, edtech, and e-commerce businesses.
According to Thai, the accelerator landscape in Vietnam is still “pretty thin,” compared to the incubator landscape.
Last November, 500 Startup hosted its Demo Day to showcase nine startups in its portfolio to over 100 investors. Most of the nine startups have graduated from the three-month Saola Accelerator programme, where 500 Startups Vietnam invested up to $150,000 in each participating company.
The early-stage investor has recently joined forces with other VCs in forming Vietnam Venture Capital Alliance and pledged $815 million for investment in Vietnamese startups till 2025.