Venture capital in Vietnam may surpass US$1 billion in 2021
Venture capital in Vietnam will reach $600 million and may surpass $1 billion in 2021. The country is expected be an attractive destination for venture capital funds in the following years.
Le Hoang Uyen Vy, founder of DO Ventures, said that 2019 saw a record high venture investment in Vietnam with nearly $900 million, nearly double that of 2018. However, the Covid-19 pandemic led to a global recession, so investment in technology in Vietnam slowed down in 2020.
Statistics by DO Ventures show that the total investment capital for 2020 decreased by 48% compared to 2019, while the number of investment deals only slightly decreased by 17%. The founder of Do Ventures said that the value of large investments (Series C +) decreased by almost three times, while early-stage investments recorded an increase in both value and volume in 2020.
The decline occurred in the first half of the year when uncertainties about the impact of Covid-19 on the economy were at their peak in Vietnam's capital markets. However, investment activities quickly returned in the second half with the number of deals almost equivalent to the same period in 2019. Thanks to the timely control measures of the Government of Vietnam, the time of social distancing in the country took place at a minimum and the economy will soon recover.
The number of early-stage investments with a value of less than $500,000 increased 11% in 2020, with an increase in both value and number of investments in the second half of the year. In contrast, later-stage investments fell sharply in both value and quantity.
Investments valued at $10-50 million saw the largest decline of up to 60% in the number of deals, followed by investment deals worth $3-10 million with a 42% decline. However, the number of investments in this capital range nearly doubled in the second half of the year. This is an optimistic sign for next year when the Covid-19 vaccine is widely circulated and the world markets begin to reopen.
Payments and retail remained the two most invested sectors in Vietnam during the past three years. Le Hoang Uyen Vy explained that these are the two areas that create the basic infrastructure for the Internet-based economy. The capital of $564 million raised from the payment field in the period 2013-2020 belonged to leading companies in the industry.
Financial services and real estate started to prosper, in which the lending sector accounted for 86% of capital in financial services. Long-term changes in consumer and business behavior are paving the way for emerging areas such as education, healthcare and digital transformation in business. However, the value and quantity of investment is still modest because these fields are still in the budding stage and there is much room for development from 2021 onwards.
An optimistic sign is that in the first 9 months of 2021, the total number of investments was almost equal to 2020, with more than $600 million. Venture capital in Vietnam in most investment rounds increased in both quantity and value. Some notable deals are VNLife calling for $250 million; Tiki receiving another $20 million; and Kiot Viet successfully raising $45 million.
Le Hoang Uyen Vy also said that in the fourth quarter of 2021, there are some big deals expected. Vy believes that venture capital into Vietnam will surpass the threshold of $1 billion in 2021, marking a year of recovery of the digital economy and a record year for venture investment in Vietnam.
Vietnam ranks third in Southeast Asia in terms of investment volume. Data shows that Indonesia attracted more than two-thirds of investment capital to the region in 2020. Compared with other countries in the region, the value of technology investment in Vietnam in 2020 decreased significantly, partly due to later-stage startups closing large rounds of fund raising in 2019.
A survey by Do Ventures with 50 investment funds operating in six major markets in Southeast Asia shows that Vietnam is considered the leading focus market of investors in the following years. The most attractive areas will still be education, health care and financial services.