Vietnam’s edtech scene sees spurt in investments, but real test will be user retention

Photo by Compare Fibre on Unsplash.

The raging COVID-19 pandemic has led to a revival in investor interest in Vietnam’s nascent edtech sector.

So far this year, six players in the sector have announced fundraisings amassing at least $22 million. In comparison, there were only three announced deals in the entire 2020 and six deals in the entire 2019.

Data from local venture capital (VC) firm Do Ventures shows overall edtech funding in Vietnam stood at $8 million in 2020 and $32 million in 2019.

In 2018, Topica Edtech Group had raised $50 million from private equity firm Northstar, bringing the total edtech funding that year to $53 million, before the lull started.

Besides the spurt in overall funding this year, there is also more participation from overseas edtech players operating in Vietnam such as Astrid (Sweden), Geniebook (Singapore), Snapask (Hong Kong), and Ruangguru (Indonesia).

Expand Table

Year of funding/foray in VietnamCompanyInvestorsFunding amount
2021ELSAVietnam Investment Group, SIG, Gradient Ventures, SOSV, Monk's Hill Ventures, Endeavor, Globant Ventures$15M
EdmicroBEENEXT, Qualgro, Insignia$2M
ManabieDo Ventures, Genesia, Chiba Dojo$3M
EdupiaeWTP$2M
Astrid* Angel investors
Geniebook*Apricot Capital
2020VibejiReapra$100,000
HocmaiGalaxy
Snapask*Asia Partners, InterVest, Kejora Capital, SOSV, others $35M
2019Dream Viet (Kyna)Cyberagent Capital, SEAF Women's Opportunity Fund
Everest EducationHendale Capital, VietCapital, Nullabor$4M
789.vnEQuest
KynaBizNavigos
Schola500 Startups, Nexttech
Ruangguru*GGV Capital, Tiger Global Management, General Atlantic, EV Growth, others
2018Topica Edtech Group Northstar$50M
Edu2ReviewNest Tech

* International companies expanding into Vietnam

More deals are expected to be sealed this year as English learning apps Kyna and ekidPro are planning fundraisings.

Kyna’s CEO Ho Hong Bao Tram told DealStreetAsia that her company plans to raise $5 million in a Series A round this year, while ekidPro is understood to be seeking millions of US dollars for expansion after investing in its technology for a year.

Exploding user growth

Vietnamese schools have been closed since the start of 2021, except in March and April when the pandemic appeared to be under control. With no clear sign of reopening, schools have moved to platforms such as Zoom and Teams to continue the curriculum.

However, parents and students have been flocking to online tutoring platforms as they feel the school curriculum is not enough.

“Our self-paced learning unit witnessed a 2x year-on-year growth in H1 2021, while the tutoring business grew by four times. We’ve experienced strong growth during COVID-19 because parents are seeking an alternative to offline learning,” Kyna’s Tram said.

Edmicro, too, saw a 1.5x increase in the number of schools it partnered with. Starting off with 100 schools, by the end of H1 2020, the self-learning platform had reached 250 schools across 11 provinces, with 15,000 teachers and 300,000 students onboarded. Moving into 2021, Edmicro continued to achieve 2x growth in users, said Yinglan Tan, founding managing partner of Insignia Ventures Partners, an investor in the company, to DealStreetAsia.

Meanwhile, Ruangguru claims its Vietnam business — Kien Guru — has the largest user base compared to other K-12 online learning apps, with over 1.5 million downloads.

“Vietnam has a huge potential for online learning with a 17.55 million student population (a third of Indonesia’s student population), a growing economy, and high internet penetration of 70.3%. In addition, Vietnam has a rising middle class with highly motivated parents and students, and growing demand for quality education,” opined Arman Wiratmoko, Ruangguru’s vice president of corporate strategy and finance.

“There is no sizable player yet in Vietnam and we believe that by entering the market early, we can replicate the success we achieved in Indonesia,” he added.

Snapask, a Hong Kong-based tutoring app backed by Asia Partners and Intervest, among others, is also witnessing growth in the country. “We are seeing a paradigm shift in both tutoring and online learning in the Vietnam education sector,” said Timothy Yu, founder and CEO. He says the uneven availability of educational resources between urban and rural areas in Vietnam is amongst the premises for Snapask’s growth.

Nascent players

While Asian markets, including China and India, have produced most of the world’s edtech unicorns, Vietnam is still far behind in terms of high-valued startups in the sector.

India’s two most valuable edtech companies are Byju’s and Unacademy, worth $16.5 billion and $2 billion, respectively. Meanwhile, China is home to eight edtech unicorns, according to education intelligence platform HolonIQ. In Vietnam, meanwhile, Northstar’s $50 million investment in Topica in 2018 was the biggest ever round. However, Topica later faced issues with scaling and went through a major restructuring due to corporate governance issues.

“The scale and pace at which edtech companies in Vietnam are growing may not be as fast as larger markets when these startups head towards growth stage, resulting in lower investment values,” Insignia’s Tan asserted.

William Bao Bean, general partner of SOSV, an investor in Snapask and the AI-based English learning app ELSA, explained that generally, edtech can be replicated across multiple countries, whereas most of the opportunities in Vietnam have been focused on serving local customers.

“Except for ELSA, we haven’t seen [Vietnamese] people pay for online [education services]. So, the total available market size in Vietnam for education is not as large as in other markets,” Bean said. Moreover, a lot of the edtech solutions cater only to Tier 1 and Tier 2 cities.

For edtech firms to achieve scale, Bean asserted that there are three decisive factors — expanding operations beyond Vietnam, providing a personalised learning experience, and establishing a cross-border team that is able to unlock capital from not just Asia but the US and other parts of the world.

“Vietnam is yet to see edtech companies with valuation in the $100 million range, but there is an attractive opportunity for Vietnam to be a market where edtech is going to be an important part of the country,” said Sandeep Aneja, managing partner at Kaizenvest, which has invested in Ho Chi Minh City-based education group YOLA.

“It is not that the market is not there. The market has to go through an evolutionary phase where students and teachers are willing to adopt technology,” he added.

Retention vs growth

Even as edtech startups are onboarding students in droves, user retention is not a given.

“Edtech startups are hard-pressed to prove that the users gained will be retained, and they have the capacity (in terms of operations and resources) to meet the demands of the growing userbase,” said Insignia’s Tan.

In Vietnam, local edtech companies are still more focused on marketing and sales rather than applying their technology to users’ needs, said Khoi Tran, an investment banking executive at the China- and Southeast Asia-focused investment bank Favour Capital.

“Interactive learning will be a big trend in future, but it’s difficult to find a Vietnamese startup with intensive tech investment and disruptive solutions. This has resulted in small funding rounds,” he added.

Danny Hwang, founder of Gaw Capital-backed blended learning platform NPX Point Avenue, was of the same view: “You have great engineering talent in Vietnam, but what’s lacking are product managers who are experienced in integrating technology with user experience.”

Meanwhile, Tram also pointed to the local consumer behaviour, which is unique in Vietnam. “A simple pre-recorded video format can work in other markets, but retention for such models in Vietnam is very low. Vietnamese consumers have a lot of offline options, so it’s more expensive and requires more time and effort to gain the same traction as in India or China.”

Moreover, the international players are adding to the competition.

Take Kien Guru. The company builds age-appropriate content, as well as various features such as gamification, study planner, flash concept for comprehension check, and also applies AI for personalisation.

Astrid, an AI-enabled education company from Europe that entered Vietnam earlier this year, has roped in industry veterans for its tech and academic teams, including a PhD in applied linguistics who was a senior director at the Swiss-based learning company Education First, and its vice president of product who was part of the building team for the Candy Crush franchise.

“Our insights platform, which our teams developed in close collaboration with school teachers, keeps the parents informed on their child’s learning progress and offers them recommendations on activities they can take part in with their child. We find that keeping the parents informed and engaged lowers the churn rate,” said Andreas Kullberg, founder and CEO of Astrid.

Segments to tap

Online English training for kids is the largest segment in edtech in Vietnam, say experts DealStreetAsia spoke to. It is also the segment that has attracted the most startups — Kyna, Monkey Junior, Chip Chip, One On One English, and EkidPro, to name a few

“If you speak understandable English, different studies show that you can increase your salary by 30-40% on average.  Vietnam has been a major beneficiary from recent changes in global trade patterns, and English is going to be a table stake,” said SOSV’s Bean.

While upskilling, too, is a popular segment, Kyna sold its adult upskilling unit to local recruitment firm Navigos in 2019 to focus on the kids’ segment. “Upskilling is a major vertical in edtech, but a partner like Navigos will better scale up the business,” Tram explained.

There are also other niche segments.

Ho Chi Minh City-based CoderSchool, which focuses on teaching coding to adults, sees a lot of growth. “The demand is big. We get many emails from companies every day, asking if we have engineers for hire,” Charles Lee, co-founder of the firm, told DealStreetAsia.

While these startups are in a very premature edtech market, both entrepreneurs and investors are optimistic about Vietnam. “When you look at the overall tech industry, it looks like an iceberg. At the top, there are no real leaders but underneath, there are plenty of opportunities,” said Hwang.

From a VC perspective, Tan expects more investments that will widen the playing field and allow more edtech startups to enter the fold. “The more competitive the playing field, the bigger the incentive for investors to come in and eventually become category leaders, which will be critical for Vietnam’s edtech scene to flourish,” he said.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.