Seed to series A Japanese investor IMJ Investment Partners, which has already made one venture funding in a Ho Chi Minh City-based startup, is scouting for more investible bets in Vietnam.
While 40 per cent of its Southeast Asian portfolio come from Indonesia, IMJ is sourcing for more opportunities in Vietnam.
As exits have been a pain point in the Vietnam startup scene, the Japanese investor is prepared for different options for exits, even helping investees tap the IPO route. IMJ Southeast Asia investment manager Ryu Hirota says, there is no clear pattern for an exit plan, but IMJ can consider an exit after five years of investment.
The firm typical invests in the region of $100,000-300,000. Founded in January 2012, IMJ originally focussed on Japan and Silicon Valley but started looking at Southeast Asia following setting up of an office in Singapore in February 2013.
IMJ screened around 500 companies and made 15 investments last year. The fund is targeting 15 investments in 2016 and has made four financing rounds so far this year, Hirota said.
“While the markets in the US, China and India have crashed, the situation in Vietnam is different. So I hope there will be more investments in Vietnam,” said Hirota.
The country witnessed nearly 70 recorded investments into startups in 2015, more than double the figure a year earlier, according to a Topica report.
“Vietnam is booming and attracting more investors for sure,” Hirota commented.
With growing Internet and smartphone penetration and tech-savvy population in Vietnam, products and services of startups can easily be adopted in this market. The tech space is ready to take off, the fund principal opined.
Apart from a promising market, Vietnam has the advantage of replicating technologies from other markets to localise. A lot of ideas that have proven to be successful models in the world can actually work in Vietnam, he added.
Meanwhile, Vietnamese startups are still progressing in the domestic market, while investors tend to look for a regional or global reach typically within 3 to 5 years of operation of a company, said Hirota.
Another weakness of local startup is the fragmentation between the technology and business talent. Vietnam has its major tech talent pool coming from the north and business talent from the south. “If companies form their teams with talent both from north and the south, it will be a very competitive combination,” he added. He also sees overseas founders – armed with higher education, languages and an open mindset – coming to Vietnam to do business, which is a really encouraging trend.
IMJ, which aims to be a partner for its investees, has connected three Japanese corporations with its portfolio firms in Southeast Asia. The fund also runs its own accelerator programmes.