Asia’s next start-up unicorns may spring from Vietnam: ADB report

Hanoi (VNA) - Asia and the Pacific’s next tech start-up “unicorn” may come from Vietnam, as the groundwork to build a strong ecosystem capable of supporting these businesses is well underway, according to a new report by the Asian Development Bank (ADB).

The Government of Vietnam’s long-term objective for the sector is to attract knowledge, organisations, individuals, and entrepreneurs to contribute to economic development and create successful start-ups.

ADB’s report, entitled “Vietnam’s Ecosystem for Technology Startups”, looks at the progress of start-ups in the Southeast Asian country.

An example of government support is Project 844, which aims to develop up to 600 enterprises by 2025, 100 of which will have collectively raised at least 2 trillion VND (about 85.44 million USD).

This goal is supported by the National Technology Innovation Fund and two new projects, "Supporting Students in Starting a Business up to 2025” and “Supporting Women’s Start-ups in 2017–25”.

ADB Economist Aimee Hampel-Milagrosa, one of the report’s lead authors, said that the Government of Vietnam recognises that tech start-ups are the new engines of growth for the country.

To facilitate this, it has started to put together key ingredients, such as financial and policy incentives, to create and build the next generation of Vietnamese start-up unicorns, she said.

In 2021, the top five start-up sectors that received the largest funding were financial technology, or “fintech” (26.6%); e-commerce (20.3%); educational technology, or “edtech” (17.2%); health technology, or “healthtech” (7.8%); and software as a service (6.3%).

The report looks at healthtech and agriculture technology, or “agritech”, because they have a high social impact and potential to contribute to more inclusive and sustainable development.

While financing was a common constraint to the growth of start-ups, angel investors and venture capitalists were found to be eager to invest. Another obstacle to growth is insufficient human capital. However, universities and research institutes in Vietnam work with provincial authorities and central ministries to establish units to support start-ups. They are also organising start-up events for students to promote the culture of entrepreneurship among young people.

Vietnam has one of the newest and most dynamic start-up scenes in Asia, and it has emerged as a hub for start-ups, according to the recently released Emerging Giants in Asia Pacific report.

The report, launched by HSBC and KPMG, cited start-up data platform Tracxn as showing that Vietnam was home to just 1,600 start-ups at the start of the COVID-19 pandemic, but that total has jumped to more than 3,000 now, including four unicorns.

Driving the country’s digital economy are a large and young population willing to test and adopt new technology consumer services, supportive government policies, and a surge in overseas funding.

Although Vietnam’s per capita GDP remains relatively low compared to others in the region, its economy is expanding faster than any other market. Growth is predicted to hit 5.5% in 2022 and 6.5% in 2023, near pre-COVID-19 expansion levels, according to World Bank estimates.

The report said VNG, a Ho Chi Minh City-headquartered super-app provider, is Vietnam’s longest-standing successful start-ups to date. Launched in 2004 as a gaming business, but with offerings including chat app Zalo, which now has more than 60 million users, and e-wallet ZaloPay, it reached unicorn status as far back as 2014.

Riding the surge in e-commerce, deliveries and online media boosted by the pandemic, VNLife, operator of B2B mobile payment provider VNPay, became Vietnam’s second unicorn in 2020.

Venture capital deals surged to 1.1 billion USD in 2021, up from 301 million USD in 2020 and 330 million USD in 2019. By the end of last year, two more companies were also unicorns: game developer Sky Mavis and the country’s most widely used e-wallet MoMo./.