Vietnam is expected to have more unicorns – or startups with value of at least US$1 billion – in the time ahead as the country has many advantages to support  the development of the businesses, experts said.

Lee Jae-woong, who was one of three founders of Daum Communications (now Kakao), said Vietnam offers huge potential for startups, driven by its growing internet penetration, smartphone adoption and predominantly young population.

Vietnam now has favorable conditions to produce unicorns, like South Korea of 20 years ago, and it is time for Vietnam’s unicorns to turn up, Lee said, adding South Korea underwent industrialization in the 1960s, developed an IT industry in 2000s and is now entering the Fourth Industrial Revolution era.

All three stages are occurring in Vietnam at the same time, which is a chance for Vietnam to make a jump in development.

In 1995, South Korea’s GDP per capita was US$8,000. And now the GDP per capita in Ho Chi Minh City is US$9,000 and the same level is in Hanoi. Vietnam has low labor costs but these are not all what Vietnam has. “It will be a farm that breeds unicorns,” Lee said.

Sharing the same view, Yinglan Tan, founder of Insignia Venture Partners, said Vietnam is a vibrant startup market full of potential for breakthroughs if proper investments are made.

In addition to the attractiveness of the market and strength of startups, investors also see the strong competitiveness of Vietnamese startups over foreign rivals.

Bert Kwan, CEO of Northstar Group, said that startups in Vietnam are extraordinary and amazing, adding that the country will have technology startups filing an initial public offering overseas within two years.

Nguyen Manh Tuong, CEO of MoMo, is even more optimistic. He believes that after two years, technology startups will list shares on foreign bourses.

Currently, one of major challenges facing the startup community in Vietnam is the lack of talented workforce. However, some leading universities have begun training in data science, thus the labor shortage in the field is expected to ease in three years. Some big startups have also attracted talent from overseas.

“Vietnamese startups lack qualified officers. However, things are getting better. Talents have come back,” Tuong said.

Flourishing market

Investment in Vietnamese startups tripled the previous year to US$889 million in 2018 with 92 deals, according to a report released by Topica Founder Institute (TFI), a startup accelerator program in Vietnam and Thailand run by Hanoi-headquartered multinational educational technology company Topica.

Of these, the top 10 investments alone totaled US$734 million, accounting for 83 percent of the total value of all investments in startups. The three biggest deals were made by Vietnamese multichannel media giant Yeah1 (US$100 million), e-commerce company Sendo (US$51 million) and tech education company Topica (US$50 million).

The five most profitable fields for startups were fintech, e-commerce, traveltech, logistics and edtech. Fintech returned to the top spot in investment volume in 2018 with 8 deals totaling US$117 million. E-commerce followed with 5 deals worth around US$104 million.

Experts forecast fintech and e-commerce will continue to maintain the top priorities for investors in the next few years.

However, to make Vietnam more attractive to startups, experts suggested that in addition to financial support through funds and preferential loans, the government also needs to increase investments in training and education to build a skilled workforce.

It also needs to continue with its regulatory reforms, as it will lead to a business-friendly environment for investors and developers. This will not only attract the much needed foreign investment but also the talented workforce from the surrounding region, which will help the firms achieve reasonable scale.

Hanoitimes