US-based accelerator and investment fund 500 Startups, which just launched a dedicated $10-million fund for Vietnam, is targeting 150 investments, at an average 50 deals a year.
“We estimate 1,000 startups, maybe even more, coming online every year. So for us to make 150 investments in the next few years, say three years, we need to think of 50 good companies that we can invest per year. So, 50 out of 1,000 is not a too high percentage,” 500 Startups investment partner Eddie Thai told DEALSTREETASIA on the sidelines of the recent Saigon Tech Startup Fest.
“It is just the matter of choosing the right ones.”
500 Startups appointed Eddie Thai and Binh Tran as investment partners for the region ahead of the fund announcement.
500 Startups has invested in 12 local teams in Vietnam, from verticals such as e-commerce and logistics to education. One of its earliest investments was ELSA, an English language teaching system founded by two Vietnamese women entrepreneurs.
ELSA beat over a thousand startups globally to win the recent SXSWedu tech startup competition in the US. Elsa, which stands for English Language Speech Assistant, functions as a personal coach to help English learners around the world speak English more correctly and confidently. “It is something very noble, solving a problem that few people in the Silicon Valley are working at,” Thai talked about the app.
“To me, they represent what Vietnamese entrepreneurs can do and we are very happy to have investment in them early on,” he said.
Vietnam Vs Indonesia
Vietnam will need 12 to 36 months to catch up with Indonesia in terms of startup valuation but the two countries remain top investor favourites in Southeast Asia, said Eddie Thai.
“It is partly a matter of timing. Indonesia got a slightly earlier start on this, and it has a much larger market size, so it is easier to get higher valuation sooner,” Thai explained.
“There are series A, B, C investors all around the region that want to invest in Vietnam as well,” he added. And, according to him, the investors almost always say Vietnam and Indonesia if they are to pick the most exciting markets in Southeast Asia.
Thai believes both Indonesia and Vietnam pose a lot of interesting opportunities, and just because Vietnam is not standing where Indonesia is yet does not mean these (Vietnamese) startups are not good.
Bringing the Silicon Valley to Vietnam
Helping connect Vietnamese startups with the Silicon Valley, supporting on growth strategies and building out the teams are what 500 Startups is present to do after its first investment in the country, said Thai.
“Bringing the Silicon Valley to Vietnam” was the theme of the Saigon Tech Startup Fest, which means bringing the Silicon Valley know-how and culture to integrate with the strongest elements of the Vietnamese culture.
“Binh (Tran) and I are always impressed by the hustle (of Vietnamese startups),” Thai said. “It is not that we need to replace things here with the Silicon Valley, it is creating the Vietnamese version of the Silicon Valley.”
Vietnam is home to some 90 million people, around half of the population are digital natives. The country is also the third fastest growing economy in the world since 1990. “The numbers make sense,” said Thai. “That has translated into a lot of energy and economic growth over the last seven years and we believe there will be a lot in the future.”