The investment capital into Vietnamese start-ups this year would see a breakthrough despite a year-on-year decrease of 48 per cent in 2020 to reach US$451 million.
|Investments into Vietnamese start-ups this year would increase. — Photo vneconomy.vn|
The information was announced in the Vietnam Innovation and Technology Investment Report 2020 jointly released by the National Innovation Centre (NIC) under the Ministry of Industry and Trade and Do Ventures on Monday.
The report said that 2020 was a challenging year but was full of opportunities for investment into innovation and technology around the world and in Vietnam.
It said the decrease was mainly due to the absence of significant investments closed by major companies in the previous year.
However, the number of investments decreased slightly at 17 per cent, of which 60 deals were recorded in the second half of 2020 – a similar number to the same period last year.
“This shows that, after a sharp decline in the first quarter of 2020, venture capital activity began to recover from the second quarter of 2020 onwards,” the report said.
Payments and retail sectors continue to receive the highest value investments due to their key role in the development of the internet economy. Investment capital in payments and retail were $101 million and $83 million, respectively.
Some industries such as human resource technology (HRTech) and real estate technology (PropTech) continued to attract investment, while industries such as education technology (EdTech), health technology (MedTech), and software as a service (SaaS) were on the rise due to the change in behaviour of consumers and businesses during the COVID-19 pandemic.
In the difficult context of the global economy because of the pandemic, the number of foreign investors only slightly decreased in 2020, showing that Vietnam is still an attractive destination for investors. The strongest activity came from domestic investors and investors from South Korea and Singapore.
The steady funding into start-ups in the early stages is especially important for the health of the entire venture capital ecosystem. Do Ventures recorded more than half of the total number of investments in Vietnamese technology start-ups were made by domestic investment funds.
“This is an indication showing the important role that domestic investors play in supporting start-ups in the early stages to continue to go further in this challenging period,” said Do Ventures.
The report said that although Vietnam's technology investment market experienced an inevitable slowdown due to the impact of COVID-19, founders in the country have taken advantage of all available resources to survive and continue to grow because the crisis is always a powerful catalyst for disruptive business models to emerge.
“We believe that, with efforts from the Government to promote digital economic growth and create a favourable business environment to attract foreign investment, Vietnamese start-ups will have many opportunities to breakthrough when investment activity gradually recovers,” the report added.
The Vietnam Innovation and Technology Investment Report 2020 was released on the basis of co-operation between Do Ventures and NIC. This is a project for successful combination between a private venture capital fund and a State agency with the common goal of building an innovation ecosystem in Vietnam.
Vu Quoc Huy, NIC’s director, said: “NIC is researching and proposing to build a legal environment for innovation in Vietnam as well as specific programmes, policies, and testing mechanisms to support innovative businesses. The report aims to provide information to investors on innovation investment activities in the country, thereby attracting domestic and foreign investment capital for innovation."
Le Hoang Uyen Vy, CEO of Do Ventures, said: “The challenges spanned the whole of 2020 and will probably not stop in the near future. However, as people operating in the field of innovation, we always see opportunities in difficulties. Do Ventures believe in the ability of entrepreneurs to overcome obstacles to create new values for society and at the same time is committed to always supporting them during key times.”
Vietnam tops the list of destinations for venture investors for the next 12 months.
Despite the global recession, Vietnamese startups have still been attracting millions of US dollars from foreign funds in the beginning of 2021.