2024: Economic difficulties, what will Vietnamese startups do to attract capital?

In the context of an increasingly difficult economic situation and investment funds tightening spending, Vietnam is still the only market in Southeast Asia with increased investment in the first half of 2023 compared to the second half of 2022.

According to the Southeast Asia Digital Economy Report released by Google, Temasek and Bain & Company at the end of 2023, private equity funds in Southeast Asia have fallen to a six-year low after reaching a record high, closely following the global shift due to high capital costs and investment cycle issues. However, Vietnam continues to be a bright spot for investment in the Southeast Asian region.

1. Vietnam is a bright spot attracting investment capital. private

According to statistics from the Vietnam Venture Summit 2023, the number of participating funds and committed capital is constantly increasing, from 18 funds with 425 million USD in 2019 to 33 funds with 815 million USD in 2020 and 39 funds with 1.5 billion USD in 2022.

Despite the difficult economic situation, Vietnam's innovation and startup ecosystem is still developing very positively. Vietnam is currently ranked 46th out of 132 countries and economies according to the Global Innovation Index 2023 report and is one of three countries with innovation results that have exceeded their development level for 13 consecutive years. Vietnam's startup ecosystem has increased from 5th to 3rd place among the top 6 economies in Southeast Asia, reflected in the ratio of investment capital in the creative startup market as well as the number of investors and investment funds operating in Vietnam. In the first 6 months of the year, the total investment capital in the technology sector in Vietnam still ranked third in Southeast Asia, with a total investment value of 413 million USD.

“Despite the current economic slowdown, Vietnam has been the fastest growing economy in Southeast Asia for many years. Notably, Vietnam has shown positive growth in investment volume in the first half of 2023 compared to last year, which is a testament to investors’ confidence in the country’s long-term potential,” said Andrea Campagnoli, Bain & Company’s Vietnam office head and founding partner.

However, on the investment fund side, Mr. Dang Thai Cuong, Deputy General Director of FUNDGO Creative Startup Investment Fund, said: “Startups still face difficulties in accessing initial investment capital, as well as a shortage of skilled human resources. The domestic consumption market is still quite limited, which is also a big challenge.”

2. What do startups do to overcome difficulties?

According to Mr. Cuong, startups need to proactively learn and make the most of the government's support policies. In addition, they need to flexibly change their business models to suit market trends. To overcome difficulties in human resources, startups should organize training to improve skills for their teams, and at the same time seek partners and startup communities to learn and share experiences. Expanding to foreign markets will also help startups access more opportunities...

In particular, startups need to clearly define their goals and areas of operation, and constantly innovate to adapt to trends. In addition, building a sustainable business model is also very important. “FUNDGO is ready to provide capital for potential startups, and will send leading experts to support strategy development and share management experience,” Mr. Cuong shared.

Specifically, Mr. Cuong gave an example of digital transformation, FUNDGO has successfully invested in the startup HanaGold, helping them apply 4.0 technology to the jewelry industry. HanaGold has integrated NFC chips to identify owners and trace origins, and has a solution to buy and accumulate gold from only 100,000 VND. In the field of sports, FUNDGO has invested in the startup Run Together, which specializes in producing sports shoes with integrated 4.0 technology to support health measurement and accumulate rewards to encourage athletes...

Regarding the investment strategy in digital technology startups, Mr. Cuong said that FUNDGO Creative Startup Investment Fund is targeting Vietnamese startups in the fields of fintech (financial technology), healthcare, education, high-tech agriculture. FUNDGO will support startups with capital, as well as share experiences and connections for startups to develop sustainably...