The year 2014 was a good year for the Vietnamese startup ecosystem. Domestic startups saw several new investment deals while consolidating through mergers and acquisitions. Meanwhile, several global startups expanded operations to the county even as Vietnamese startups invested in other Southeast Asian countries.
This was revealed by the Topica Founder Institution as they reviewed the year’s startup activities in the country.
In 2014, the spotlight remained on tech startups. Beginning of the year, Flappy Bird became a global phenomenon, with almost three million downloads per day during that time; and brought in some daily $50,000 income for its innovator Nguyen Ha Dong.
Just days after the popularity, the creator himself removed the app, saying he could not “take it anymore” from domestic media’s criticism that Flappy Bird was a copy of Nintendo’s Mario game and the public scrutiny of his richness.
Although the bird stopped flying, it became a global showcase of Vietnam’s tech potential and innovation, leading to a spate of investment deals for startups.
Vietnam’s Startup Success
Singapore and Vietnam are the first two nations in South East Asia to have produced billion-dollar companies that made a mark on world’s startup map. Singapore’s consumer Internet service provider Garena, the owner of chat app BeeTalk, was valued at $1 billion by the World Startup Report.
Similarly, VNG, which is famous for its first game product of Vo Lam Truyen Ky and chat app Zalo, with a revenue of VND1.58 trillion ( ($74.2 million) in 2014, is among the top digital content companies in Vietnam and is providing games to over 11.3 million game enthusiasts around the world. It was also valued at $1 billion.
Last year also saw an increase in the number of startup investment, from 25 deals in 2013 to 28 deals. However, the value of most deals was not disclosed. Seven of those deals are led by Japanese investors. As seen in the table below, Cyberagent Ventures was one of the major Japanese investors, with multi-company investments in Vietnam startups.
Similarly, six other deals were led by US investors, of which, three investments were done by VC 500 Startups.
There were two more mergers in 2014, which involved Mobile Entertainment Corporation acquiring online game payment service FPT Gate and Chicilon Media purchasing restaurant reviewing website Diadiemanuong.com.
Another batch of five Topica graduates found seed funding from angel investors, including marketing app Beeketing, online design platform Uplevo, English tutoring service Antoree, mobile game developer Morbling and freelance service platform Vlance.
Domestic and international competition
Less than a year of operation, Nguyen Tuan Anh, CEO of GrabTaxi Vietnam, has managed to expand his business from Ho Chi Minh City to the capital city of Hanoi and allured thousands of taxi drivers to join his network. According to a Younet Media report, GrabTaxi is the most popular ride-sharing app, followed by Uber.
Meanwhile, Nguyen Dang Quynh Anh, director of Viber Vietnam, expects that her company will soon account for 60 per cent of the messaging service market share. The target is already in sight, as Viber is a market leader in this category with 52 per cent market share.
Even as the international startups make competing in the domestic market harder, Vietnamese startups are expanding operations to other countries in Southeast Asia.
Mobile content distributor Appota has invested in Indonesia while advertising platform CleverAds has expanded operations to Indonesia and the Philippines. Similarly, e-commerce firm PeaceSoft has invested in Malaysia, while Topica opens offices in Philippines and Thailand.
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Most of those companies agree that Indonesia was the easiest place to do business. “Indonesia offers a more transparent environment to do business than Vietnam,” said CleverAds founder and CEO Nguyen Khanh Trinh.
“There are few local businesses, plus the market offers fast growth rate. I think it is good time to be in this country,” he added.
Topica founder and CEO Pham Minh Tuan alleged that Vietnam, Indonesia and Malaysia embraced the highest numbers of startups in the region.