When first-generation entrepreneur Pham Dinh Doan, who runs an FMCG distribution business, decided to invest capital in the Hanoi University of Science and Technology-backed BK Fund, he joined Vietnam’s growing tribe of founders who are betting big on the country’s nascent startup ecosystem.
Backed by serial entrepreneurs and founders, Do Ventures, BK Fund, VIC Partners and Next 100 among those looking to double down on investments in Vietnamese startups.
What has added momentum to their deal-making plans is Vietnam’s rapid restoration of normal business activity following the coronavirus outbreak in late 2019. Besides, prolonged travel restrictions have stalled investments by global and regional investors, without a local presence.
Deals clocked during the first half of 2020 saw increased participation of local firms and foreign investors, who have personnel based in Vietnam, according to a report by Do Ventures.
Of the total 61 deals during the January-June period, more than a fifth, or as many as 13, saw funding from local Vietnamese firms alone. In 2019, participation from Vietnamese funds stood at 15%, while in 2018, 10 out of 55 deals saw funding from domestic firms.
|Name of fund||Name of Entrepreneur/Position||Year of establishment||Fund size||Number of investment||Investees|
|Do Ventures||Le Hoang Uyen Vy and Dzung Nguyen||2020||$50M||3||Manabie (Do Ventures co-invested in $3 million round); Computer Vision and AI tech company Palexy; Food startup F99 (Do Ventures invested $900k)|
|Next100||Nguyen Hoa Binh||2019||$10M||17||Top CV, Computer Vision, Chatbot Vietnam JSC, Ngan Luong, Vimo, NextPay, FastGo, PushSale.vn, BoxMe|
|BK Fund||Pham Dinh Doan/ Chairman||2020||$10M (raising)||17||Gimo, a flexible 24/7 payroll platform|
|VIC Partners||Hung Dinh/ Founding Partner||2016||$1-$3M||17||TopCV, Happy Skin, Printgo, Callio, VLeisure, Co-host.Ai, Schola, ColorMe, DesignBold |
|Viet Valley Ventures||Nguyen Khanh Trinh/ General Partner||2019||-||3||JobsGO, WINDSoft, Ecomeasy|
|Simple Tech Investment||Pham Minh Tam/Chairman||-||-||17||Jupviec.vn, Rever, Ecomobi, MyCar, 30Shine, Anycar.vn, KynaKids, Pobble,…|
The COVID-19 pandemic, which saw many startups struggling to survive, also witnessed several others who needed capital to serve the boom in demand in select sectors. Increased demand for capital from startups in high-growth sectors has driven these local venture capital firms to seize the opportunity.
Take VIC Partners, for example. The investment firm is completing fundraising for its second vehicle (VIC II Fund) for which it is targeting to triple the corpus. It is also looking to double the ticket size per deal.
“In addition to scaling up capital, we also updated the investment thesis, creating opportunities for new technology trends like blockchain,” VIC Partners founder Hung Dinh said.
Dinh, who founded the “Photoshop for amateur designers” DesignBold, set up VIC Partners in 2016 to capture seed-stage investing opportunities.
“2021-2025 will be the era of Asia. I hope Vietnamese entrepreneurs will participate in building more large technology projects in the international market,” Dinh believes.
To date, VIC Partners has invested in nine startups with amounts ranging from $50,000- $200,000 per deal. The investment firm has had two successful exits that generated multiples of 14x and 34x respectively. Its portfolio includes HR tech startup TopCV, Happy Skin, printing services provider Printgo and CRM platform Callio.
Meanwhile, Next100, a $10-million fund set up by NextTech chairman Nguyen Hoa Binh, will bet more money on follow-on investments to extend the runway for its portfolio startups. The follow-on investments will have a ticket size higher than previous rounds, he said. The VC fund has invested in 17 startups to date in fintech, e-commerce, e-logistics, edtech, and others.
BK Fund too is looking to increase its investment ticket size from VND1 billion to VND3-5 billion.
Viet Valley Ventures, set up in 2019 by tech entrepreneur Nguyen Khanh Trinh and his partners, invested in three technology startups including JobsGo, WindSoft and EcomEasy last year. Viet Valley Ventures plans to invest in five startups every year and cut cheque sizes of up to $500,000 per transaction.
“I want to see the young generation of Vietnam get rich while still in the lecture halls,” Pham says about what drives his venture investing ambitions.
“The key aim of BK Fund is to attract successful entrepreneurs to help next-gen startups,” Pham adds.
BK Fund recently tied up with Vietnamese early-stage accelerator ThinkZone to manage and raise $10 million for its first investment vehicle. Called BK Fund 1, the investment vehicle aims to support potential startups in Vietnam with a ticket size of up to $1 million.
Pham started his business in 1993 with an initial capital of $3,000, specialising in distributing soap. Phu Thai Holdings is now the leading distributor of consumer goods in Vietnam.
For former serial entrepreneur behind ventures such as street food restaurant chain Aiya! and online shopping platform Chon.vn, Le Hoang Uyen Vy, who co-founded Do Ventures last year, nurturing early-stage startups is more like passion.
“Do Ventures was set up to fill the gap, identify talent and support them from the early-stage,” she said. Do Ventures is raising a $50-million venture capital fund.
She adds LPs including local first-generation entrepreneurs who are establishing their own structures to invest in next-generation startups are a very good beacon for the market.
However, setting up a local fund to invest in homegrown, early-stage startups is not without its challenges.
“There are many risks and challenges,” Dinh said, adding, local startups find it harder to integrate with global trends in many tech sectors.
According to Endeavor Vietnam managing director Nguyen Lan Anh, most tech entrepreneurs in Vietnam lack business experience and global exposure.
Endeavor, a global entrepreneur network organisation, typically works with companies that are scaling up and not just early-stage startups.
“We don’t have many entrepreneurs that are expanding their businesses beyond the country. I think this generation has the capacity to build an international foothold – if they dare to think big, although not every business model needs to be expanding internationally,” Nguyen added.
Endeavor network members can also choose to invest through Catalyst, a vehicle that invests in Endeavor companies. “So, once an entrepreneur becomes an Endeavor entrepreneur, if they raise funds, Catalyst will invest,” she said. Catalyst typically invests less than 10% of the total investment round, with the size capped at $2 million.
Furthermore, the lack of a legal framework for the setting up of a venture capital fund has limited the capital flow in this space, market observers add.