COVID-19 has made investment firms around the world more cautious, and Vietnam’s VinaCapital Ventures is no exception.
But instead of merely waiting out the storm, the $100-million technology investment arm of Ho Chi Minh City–based asset management firm VinaCapital has been actively observing and selectively pursuing sustainable opportunities.
VinaCapital Ventures, which is Vietnam’s largest venture investment firm, claims to have evaluated over 170 opportunities in Vietnam and the broader Southeast Asian region since the beginning of the year.
“With the current deployment rate, we expect to be on the road again sometime next year,” Trung D Hoang, head of VinaCapital Ventures, told DealStreetAsia.
“We have identified and are pursuing promising opportunities that are ready for investment in the next few months. We are focusing on pre-Series A to Series B with an average investment amount of $2 million per deal,” he added.
Since the start of the outbreak, the investment fund has been working closely with portfolio companies. Trung said the firm’s pipeline is strong and nearly a third of portfolio companies have raised new rounds of capital in the past nine months, from VinaCapital Ventures as well as new investors.
In September this year, the VC firm along with South Korea’s InterVest invested a seven-digit dollar figure in WeeDigital, a fintech firm. It had first invested an undisclosed amount in WeeDigital in March 2019.
VinaCapital Ventures also said it has actively helped to secure major partnerships for its portfolio companies in aviation, electricity, retailing, etc. to strengthen their market positions.
According to Trung, the pandemic will slow dealmaking activity because it’s difficult to determine the right valuation.
Before the pandemic, founders and VCs had a good grasp of what a series should be valued at, based on the various verifiable metrics. Right now, everyone is doing a lot of negotiations and trying to figure out the right prices for each series.
“The bad news is we will see downward pressure on valuations, and it’ll take longer to finalise deals,” Trung said.
Investment proceeds in Vietnam in the first half of 2020 fell to $222 million from $284 million in the year-ago period, as travel restrictions and uncertainties in global financial markets disrupted deal-making, according to the Vietnam Tech Investment Report by VC firm Do Ventures.
Trung, however, pointed to a silver lining: “The good news is that many VCs will see this as an opportunity to invest and may even increase their deal activity.”
COVID-19 did not bring any major change to VinaCapital Ventures’s investment strategy, which is to invest in startups that aim to solve pain points in the economy across sectors, as well as to support the current portfolio to achieve the targets they have set.
The firm will look for opportunities in businesses that are resilient and ones that recover the fastest post the pandemic.
Given that the pandemic boosts digital transformation in the country, VinaCapital Ventures expects to see a lot more activity around e-commerce going forward. This also plays into companies focused on logistics. The cost of logistics accounts for almost 25 per cent of Vietnam’s GDP, and we expect more startups to emerge seeking to improve the efficiency of that sector.
In addition, the investment fund also sees opportunities in banking, payments and healthcare, which are the sectors that benefit from the pandemic.
Last August, VinaCapital Ventures invested in An Vui, a transportation management system startup. Prior to that, it backed Logivan, a B2B truck hailing and logistics network and ride-hailing startup FastGo. Other portfolio companies of the firm include digital gifting platform Urbox and real estate portal Rever.
Partnerships and future plan
VinaCapital Ventures believes a tie-up between local investors and foreign partners is the best way to take advantage of their resources to bring the maximum benefit to portfolio companies.
Last year, the VC firm established a strategic partnership with Mirae Asset-Naver Asia Growth Fund, a $1 billion joint fund by Korea’s leading financial group Mirae Asset and the Korean internet company Naver.
“We consider our partnership with the Mirae Asset-Naver Asia Growth Fund to be strategic both for VinaCapital Ventures and the startup ecosystem in Vietnam,” Trung said.
“Our partnership allows our portfolio companies and promising early-stage Vietnamese technology companies to not only access growth capital (Series B+) but also to tap into the intellectual capital of Naver as a technology operator and Mirae Asset as a global financial institution,” he added.
At present, they have jointly invested in one company (undisclosed) and are actively reviewing a few additional co-investment opportunities.
With this partnership, VinaCapital Ventures offers a deep network and insight into the Vietnamese market while Mirae-Naver offers its experiences in neighboring countries such as China, India, Korea, etc. as both an investor and operator.
Going forward, the investment firm will continue to invest in promising teams, technologies, and business models that solve substantial industry pain points (in financial services, logistics, healthcare, broadcasting, etc.). It will look for businesses with the potential for strong customer adoption or that are disruptive in nature, which can create entirely new markets.
Given Vietnam’s current infrastructure and macroeconomy levels, the firm will prioritise industries that are fragmented, inefficient, and have low transparency as it believes technology is a viable solution that will help create significant value across industries, resulting in the overall acceleration of the Vietnamese economy.
Further, VinaCapital Ventures also plans to increase its direct and active participation within the Vietnamese technology and startup ecosystem through new events and programmes such as Hack4Growth, Make in Vietnam, HAI (AI & Smart City), said Trung.