In Vietnam, startup companies are founded with great hopes, but receive very little help from the ecosystem.
Several founders have been to accelerators, or participated in events and meetups. Local politicians acknowledge that innovations driven by startups are a catalyst for Vietnam’s economic growth, but have not encouraged connections between them and corporates.
Truong Gia Binh, chairman of top-tier tech company FPT Corporation and the Vietnam Software and IT Services Association (VINASA), has said that the support from established companies for startups is the major gap he is trying to bridge. Other efforts the 60 year-old businessman is putting together include getting the government to support the startup community, which in turn might lead to more interest from venture capital investors into this frontier market.
Some progress has happened this year. The government has agreed to demolish a proposed amendment to the Penal Code, called Article 292, that deems online services without prior permission as illegal. In addition, Vietnam is also boosting the process of establishing a national VC fund, among a bunch of other new encouraging policies.
Binh founded FPT Corporation in 1988. The company is currently a listed blue chip with shareholders being large foreign investment funds. Besides the role at VINASA, Binh is supporting Vietnamese startups by leading FPT in building dedicated initiatives, such as FPT Ventures and the latest accelerator called VIISA.
VC investors are increasingly looking at Vietnamese startups and want to find those with the “go global” vision. Is the 90 million population market of Vietnam large enough for startups?
Doing business now is the story of borderless model, if you want to see that business thrive. The exhortation for today’s startups is to go global from day one. We were so used to two distinguishing, traditional concepts of companies: domestic companies and multinational companies. But today, startups must acknowledge that they should become a globally scalable business from the start. It’d better be a global business from the idea stage, like Uber or Airbnb. They have no limitation from day one and are the real global companies. Going global is a must to be competitive.
What should they be prepared to conquer the international market?
I am very much in favour of lean startups. From the idea stage, one should manage to get first customers in the swiftest way that it can, and work nonstop to enhance the products. At first, you do the easy job to acquire the consumers near you. But ultimately, you should build a product that is appealing to global users. A lot of Vietnamese startups have the capability to do that. You can find it in Elsa and GotIt (two edtech startups by Vietnamese founders that target any users in the world).
Do you think the advantage of being local people that understand the culture and the market behavior still make any sense?
In a globalization world, market access is an issue that creates challenges for anybody. Other issues, like technology and capital resources, are also global. The most outstanding feature of Vietnamese people is the hunger for prosperity. The poor infrastructure and underdeveloped conditions in most parts of the country are driving people to earn a better life, to make a change, and to create influential people. That desire by the youth is a powerful source. I think it is the biggest advantage. If that great ambition goes with a global play, Vietnam will see a lot of successful stories.
The valuation of today’s startups seems to be significantly lower than about a decade ago, when “first generation” startups like VNG Corp and VCCorp were born, and when FPT had achieved substantial growth. Is it a true point?
From the day we saw those companies rising until today, we are just starting. The difference in valuation now and then does not say much about the changes, because in fact, the caliber of startups is almost the same. We haven’t seen a lot of cognitive breakthrough. The government should think through to invest in helping startups. It’s a venture game, we need to accept the risk of as many as 9 failure deals out of 10. But the one successful investment can be a homerun.
Active movements are happening in this market though. More investors are becoming highly interested in Vietnam. However, we have not reached some desired indicators. For example, the number of 20 VCs keen on the market is nothing compared to hundreds of investors in other countries. They are talking about billion dollar valuation as per each funding round around the world, while in Vietnam, it is only some ten millions.
FPT has initiated a slew of programmes to help startups. Can you share your mission for helping them?
Good news is that high profile investors, who invested in global tech giants, are looking at Vietnam as a potential destination for their money. Before such attention becomes reality, FPT needs to support the Vietnam startup ecosystem. VIISA is one of our efforts, and we hope to see more local major companies join us in this job. Established companies in Vietnam can help, not just as an accelerator, in a way that creates an exit route. Startups need to be encouraged to build their businesses to sell. Who will buy them then? Larger local companies should act this role. One viable method of doing so is to partner with venture capital firms from the beginning.