Many startups fail in 2020 despite big investments

The departure of a number of startups in 2020 indicate that 'impractical' ideas do not bring success.

Established in 2016, WeFit’s core model was developing a fitness gymnasium sharing app.

Many startups fail in 2020 despite big investments

Users bought membership cards (from one-month to 2-year) to use the services of the gyms and facilities of WeFit’s partners at anytime and anywhere.

As for gyms, except for clients who bought membership cards, the company also received other clients to optimize their business.

After one year of establishment, by 2017, WeFit had 5,000 clients using services monthly, 600 partners in Hanoi and HCM City, and turnover of $700,000.

The initial results helped WeFit receive funds worth $155,000 from ESP Capital. In early 2019, WeFit announced it had successfully called for $1 million worth of capital from CyberAgent Capital, KBInvestment and other angle investors.

After a period of operation, problems arose.

WeFit then offered a lot of preferential service packages. In 2018, the app in some periods only collected VND2.6 million for an unlimited service package for three months in HCM City. Clients also got 3-4 free spa sessions.

Those who registered during the promotion period received a sports bag. Similar incentive programs were regularly run throughout the year.

WeFit owed money to its partners. Meanwhile, the loopholes in the management policies were exploited by WeFit’s clients, which caused a big loss.

In early 2020, the newly appointed CEO Nguyen Hai Dang of WeFit admitted the presence of many ‘virtual’ bookings, i.e. many people sharing the same accounts.

The Covid-19 outbreak dealt a strong blow on the economy, which forced WeFit’s partners to suspend operation. Because of this, there was no source of income and the capital was eventually exhausted.

On May 11, Onaclover, the technology firm and former owner of WeFit, which later changed its name to WeWow, sent an email to clients declaring bankruptcy.

In another case, the E-ride hailing market, a number of e-hailing apps, after noisy debuts, quietly left the market.

Startup assessment

 
Entrepreneurs need to answer questions if their products are suited to market demands, and if the markets are large enough for investors to spend time and money on startups to help them develop.

Pham Duy Hieu, deputy chair of SVF, said it is necessary to analyze the capability of startups and their potential. The capability can be seen in the way they adjust their interactions with clients and change their resources.

Hieu said in the three months after Covid-19, he brought a ‘culture of making adjustments’ to his business. Those adjustments helped the business succeed.

Hieu said that the value of a business is not only in products, business licenses and workforce, but the ‘flag’ and ideals of the founders.

“As long as the flag is waved, the companies will exist. The success of a company lies in the managers’ calmness, daring, and persistence,” he said.

Nguyen Phi Van, chair of the Vietnam Angel Network, noted that when calling for capital, startups talk about national and local pride, and strong determination to develop businesses. However, for startups, the first things that should be mentioned are what their products are and where they are sold.

Entrepreneurs need to answer questions if their products are suited to market demands, and if the markets are large enough for investors to spend time and money on startups to help them develop.

As Covid-19 broke out, clients’ demands and behaviors changed. So, a new question was raised about the suitability of their products.

If the products are no longer suitable, startups need to change their products, approaches and even business models to the new circumstances.

Le Diep Kieu Trang, the founder of Alabaster Fund, thinks that digital transformation offers fair opportunities to all businesses.

She believes that after Covid-19 ends, the light at the end of tunnel will appear. And the world will not be the same as it was in the past. People will still connect with each other, but more frequently on online platforms. 

Ha Duy

Vietnamese tech startups poised to rebound after COVID-19 pandemic

Vietnamese tech startups poised to rebound after COVID-19 pandemic

Vietnamese tech startups have all the tools and circumstances to bounce back and seize new opportunities after the COVID-19 pandemic.

After peaking in 2019, startup investment slows down in first half of 2020

After peaking in 2019, startup investment slows down in first half of 2020

Investment in Vietnamese startups reached a record high in 2019 but dropped 22 per cent in the first half of 2020 due to COVID-19, according to the Vietnam Tech Investment Report 2019 for the first half of 2020 by Do Ventures.

 
 

Other News

.
The birth of quirky firefighting equipment
The birth of quirky firefighting equipment
FEATUREicon  15/03/2021 

A lofty idea to help constrain fires begets a wondrous outcome.

Cua chicken: from a royal dish of yore to a notable cuisine
Cua chicken: from a royal dish of yore to a notable cuisine
FEATUREicon  15/03/2021 

The chicken from Cua land is known for its prime taste and was once served as a royal food hundreds of years ago.

Government officials convicted of public land violations, why?
Government officials convicted of public land violations, why?
FEATUREicon  15/03/2021 

Land scandals like Thu Thiem (HCM City) have revealed distorted land values caused by decisions of officials on authority, Mr. Dang Hung Vo told VietNamNet.

E-government: removing bottlenecks with a new approach
E-government: removing bottlenecks with a new approach
FEATUREicon  13/03/2021 

After two years implementing Resolution No. 17/NQ-CP on e-government, Vietnam has made great progress, adopting a new approach to solving bottlenecks and problems that have existed for a long time.

Businesses borrow VND400 trillion at high interest rates, raising concerns about solvency
Businesses borrow VND400 trillion at high interest rates, raising concerns about solvency
FEATUREicon  13/03/2021 

The financial health of many enterprises that issued bonds in 2020 is getting worse, with profits not high enough to pay bond interest.

Mobile Money paves the way for sandbox mechanism: minister
Mobile Money paves the way for sandbox mechanism: minister
FEATUREicon  13/03/2021 

Mobile Money on a trial basis will create a precedent for applying the sandbox mechanism to other services and new professions to appear in digital society.

Vietnam to form digital government by 2025
Vietnam to form digital government by 2025
FEATUREicon  12/03/2021 

Digital government will be formed by 2025, representing a transition from e-government. The challenge will be management of change.

Despite Covid-19, businesses still make multi-trillion dong investments
Despite Covid-19, businesses still make multi-trillion dong investments
FEATUREicon  12/03/2021 

Instead of staying idle and waiting for the pandemic to be contained, many businesses in Vietnam are making investments, training workers and laying down the foundation to make a breakthrough when the Covid-19 pandemic is over.

Online education: golden land for venture investors
Online education: golden land for venture investors
FEATUREicon  11/03/2021 

Like many other countries in the region, Vietnam is seen as an attractive market for online education startups.

The East Sea is 'magnet' attracting many countries
The East Sea is 'magnet' attracting many countries
MARITIME SOVEREIGNTYicon  11/03/2021 

In early March this year, the East Sea saw the presence of warships from many countries.

Innovation must be associated with the public sector
Innovation must be associated with the public sector
FEATUREicon  11/03/2021 

We must promote innovation in the public sector, and a state management system that is flexible and adaptable in order to utilize all resources in society.

Traffickers in tigers pays heavy price for illegal activities
Traffickers in tigers pays heavy price for illegal activities
FEATUREicon  11/03/2021 

Despite ironclad moves taken by appropriate agencies, the trafficking and illegal transport of tigers to make tiger bone glue remains a burning issue in Vietnam.

Will the requirement on certificates for professional titles of teachers be removed?
Will the requirement on certificates for professional titles of teachers be removed?
FEATUREicon  11/03/2021 

A representative of the Ministry of Home Affairs (MHA) says the Ministry of Education and Training (MOET) needs to show its official view about whether to remove the requirement on a certificate for professional title and why.

Refusing to sell businesses to foreign giants, businesses vow to develop VN brands
Refusing to sell businesses to foreign giants, businesses vow to develop VN brands
FEATUREicon  11/03/2021 

Local sources several years ago reported that a large foreign corporation had completed negotiations to buy Sunhouse, a Vietnamese kitchenware brand, at the price of $250 million.

Solar power developers' capacity still not fully used up
Solar power developers' capacity still not fully used up
FEATUREicon  12/03/2021 

The Feed-in-Tariff (FIT) of over VND2,000 per kwh, or 9.35 cent, has encouraged many investors to pour money into solar power. However, they have fallen into a dilemma because of unforeseeable problems.

Public land management and the Land Law
Public land management and the Land Law
FEATUREicon  10/03/2021 

In 2020, a number of public land scandals were brought to court and numerous government officials were found guilty.

How long does AstraZeneca vaccine protect patients?
How long does AstraZeneca vaccine protect patients?
FEATUREicon  10/03/2021 

Vietnam will use 60 million doses of AstraZeneca vaccine this year. How long does the vaccine’s effectiveness last?

Retail market slumps, global supermarket chains leave Vietnam
Retail market slumps, global supermarket chains leave Vietnam
FEATUREicon  10/03/2021 

Big C, Metro, Tran Anh and Vien Thong A, once powerful retail giants, have disappeared after takeover deals.

The female successors of Vietnam's tycoons
The female successors of Vietnam's tycoons
FEATUREicon  10/03/2021 

Despite their young ages, a number of women hold important positions in large corporations and own assets worth trillions of dong.

Tourists do field work, Hoi An locals make a fortune
Tourists do field work, Hoi An locals make a fortune
FEATUREicon  09/03/2021 

One of the joys of tourists coming to the ancient town of Hoi An in the central province of Quang Nam is to ride a buffalo and learn to farm.

 
 
 
Leave your comment on an article

OR QUICK LOGIN