Start-up enterprises are in recovery

Start-ups in Vietnam are attracting a large amount of cash flow from investment funds. Photo: collected

Focus on digitization

Speaking at the Start-up Business Forum organized by RMIT University recently, Mr. Jinwoo (Chris) Song, General Director of Vietnam Woowa Brothers (BAEMIN), shared how technology and digitalisation have helped the company and its catering business partners recover and thrive during and after the Covid-19 pandemic.

According to Mr. Song, as the operator of a food delivery platform, technology has given the company the opportunity to reach potential customers, reduce fixed costs, understand customers and optimize operations, while at the same time improving the speed and quality of delivery services.

Mr. Nguyen Toan, founder of Maztermind Vietnam, said that marketing on social networks is constantly developing, helping enterprises choose flexible digital payments with easy access to international online selling platforms, helping them reach international consumers.

In addition, many start-ups have incorporated artificial intelligence (AI) into their business activities, contributing to building a technology ecosystem.

As well as efforts on digitization, start-ups also try to raise capital, creating more resources for recovery momentum and accelerating development.

For example, at the end of April 2022, Masan Group Joint Stock Company announced an investment agreement of US$65 million to buy 25% of the shares of Trusting Social Joint Stock Company - a subsidiary in Vietnam of Trust IQ Pte. Ltd. (Trusting Social) headquartered in Singapore.

Trusting Social is a start-up backed by leading investment funds such as; Sequoia Capital, Beenext, Tanglin Ventures, 500 Start-jzups and Genesis Alternative Ventures. Through cooperation with Masan, Trusting Social aims to apply AI and machine learning (ML) to provide personalized products and services, serving a variety of needs from necessities, and finance to other consumer preferences.

At the beginning of May 2022, start-ups connecting retail investor Finhay successfully raised US$25 million in a funding round led by Openspace Ventures fund based in Singapore and Vietnam Investment Group (VIG) in Vietnam, with the participation of Thien Viet Securities Company - the unit that invested in Finhay in the previous round.

Finhay is a financial technology platform solution (Fintech) with the goal of connecting small investors with capital from only VND 50,000 with Vietnamese financial funds. Currently, there are 18 of 25 funds in Vietnam participating in the Finhay system.

Before that, Vietnam also had many big-sounding capital-raising deals such as Tiki successfully called for capital of US$258 million, VNLife with US$250 million, MoMo with US$300 million, Sky Mavis with US$ 152 million, and EQuest with US$ 100 million.

Waiting for more "unicorns"

In a recent report, Forbes Vietnam "listed" a number of start-ups "near" unicorn status and promising start-ups with unique business models that have many advantages to go further. They included Economical Delivery, Fast Delivery, Trusting Social, Kyber Network, Amanotes, and KiotViet. These start-ups are operating in the e-commerce ecosystem, fintech, logistics, blockchain and games.

At the end of 2021, Vietnam added two more unicorns to the list, MoMo and Sky Mavis, thanks to the increasing frequency of consumers using digital products during the pandemic. The two unicorns that appeared before were VNG (2014) and VNLIFE (2019). According to experts, the field which unicorns and "near-unicorn" start-ups operate have great growth potential in the next two to three years.

According to the Vietnam Innovation and Technology Investment Report published by the National Innovation Center (Ministry of Planning and Investment), the total investment capital in Vietnamese start-ups in 2021 reached a record level of US$1.4 billion, up four times compared to 2020. The number of projects receiving investment increased significantly to 165, an increase of 57% compared to the previous year. In terms of Southeast Asia, Vietnam ranks third in both value and volume, behind only Indonesia and Singapore, accounting for 13% of total investment in start-ups in the region, up from 8% in 2020.

This shows that many start-ups in Vietnam have proven their worth in all circumstances, even rising to become unicorns, but there are still many start-ups facing difficulties or even having to close down. Therefore, enterprises believe that it is necessary to have support and establish start-up support ecosystems from grassroots to local and central levels.

Recently, the Ministry of Planning and Investment issued Circular No. 06/2022/TT-BKHDT guiding a number of articles of Decree No. 80/2021/ND-CP of the Government detailing and guiding the implementation of a number of articles of the Law on Supporting Small and Medium Enterprises. In particular, the circular has more specific provisions to support small and medium-sized enterprises in starting up and innovating. Furthermore, many localities have also issued directives to promote innovative start-ups. Enterprises believe that this will be a catalyst to promote innovation and digital transformation in Vietnam, helping start-ups achieve outstanding growth.