The country has come a long way since its 1986 political and economics reforms. Last year, Vietnam’s GDP growth surpassed all six major Southeast Asian countries, witnessing its highest growth rate in seven years. Flourishing foreign direct investment and rising domestic demand has helped the country weather through a backdrop of sluggish global economic outlook.
A vast population set for growth
Vietnam stands as one of the most densely populated countries in Southeast Asia with a population exceeding 90 million. Of this figure, the country has witnessed a booming middle and affluent class that is expected to double in size by 2020. According to the Boston Consulting Group, Vietnam’s middle glass is the fastest growing in Southeast Asia – much like its GDP.
A key interest to venture capitalists, Vietnam possesses one of the most youthful and tech-savvy populations in the region. Its low labour costs in comparison to China has also increased its competitive edge.
Also read: Your cheat sheet on Vietnam’s startup scene
The emergence of Vietnam’s tech startups
The hallmark of Vietnam’s startup scene, Flappybird catapulted Vietnam’s mobile gaming market from relative oblivion to global recognition. The country has since witnessed an emerging startup community, inspired by the successes of home-grown Flappybird.
However, the overnight success of Flappybird is an exception to the norm. Replicating such success in the future requires great work – and the government is already on task.
In its efforts to boost startup creation locally, the government and the Ministry of Science and Technology (MOST) has directed an initiative to create a ‘Silicon Valley Startup Ecosystem’ in Vietnam. As its name suggests, the accelerator project aims to build an ecosystem for innovations and technology commercialisation.
Apart from governmental support, Vietnam is increasingly shaping an environment to support its startup community. Incubators, accelerators and co-working spaces have emerged across Vietnam in recent years in response to its thriving tech startup scene.
While exact figures are hard to obtain, it is estimated that over 1500 startups currently operate in Vietnam – a majority of which are e-commerce related. The country’s e-commerce market has been expanding significantly and is expected to become a $10 billion industry by 2020. Its phenomenal growth is largely attributed to rising internet penetration rates alongside rising disposable income – factors accompanied by Vietnam’s booming economy.
Foreign Investors: Eyes on Vietnam
While Vietnam’s startup scene saw a phenomenal increase in investments last year, the trend appears to have rolled in to the current year.
This year, 1337 Ventures – a Malaysia-based technology accelerator and early-stage investor – announced its entry to Vietnam with its pre-accelerator programme, Alpha Startups. Three Vietnamese startups received US$25,000 in funding and services.
Local fintech start-up Momo also raised US$28 million in series B funding from Standard Chartered Private Equity (SCPE) and global investment bank Goldman Sachs. Additionally, Silicon Valley-based venture capitalist 500 Startups announced a $10M micro-fund in Vietnam.
Vietnam’s startup landscape is now more vibrant than ever. Opportunities for startups to receive support and funding have never been more accessible. With all the right elements working simultaneously, Vietnam’s startup ecosystem is undoubtedly a force to be reckoned with.
Image Credit: Trinh Nick, Flickr
Want to gain first-hand access to all the action in Vietnam? Echelon returns to Vietnam on the 18th-19th November. This is your chance to learn more about the next generation of tech pioneers from Asia’s next dragon. Find out more about how you can get involved at e27.co/echelon/vietnam