Vietnam’s startup ecosystem has witnessed remarkable growth in recent years, positioning itself as a favorable destination for entrepreneurs and investors. With a surge in funding, a young and tech-savvy population, and government support, Vietnam is emerging as a key player in the global startup scene. This article explores the key aspects of Vietnam’s startup market, the industries driving its growth, government initiatives, and the challenges and opportunities that lie ahead.
1. Vietnam’s Rapidly Expanding Startup Market
Vietnam’s startup market has experienced exponential growth, with investment in Vietnamese startups reaching over US$1.3 billion in 2021. This amount is four times higher than the previous year and marks the highest investment in several decades, surpassing the previous record of nearly US$900 million in 2018 and 2019 (National Agency for Technology Entrepreneurship and Commercialization – NATEC). The number of startups in Vietnam has also skyrocketed, growing from approximately 1,600 at the onset of the Covid-19 pandemic to over 3,000 in July 2022, including the emergence of four unicorns.
Furthermore, Vietnam’s economy is rapidly expanding, with a predicted growth rate of 6.5% in 2023, approaching pre-COVID-19 levels of expansion (World Bank). According to Startup Genome, Ho Chi Minh City ranks third in ASEAN in terms of ecosystem value, with an economic impact of US$5.22 billion, trailing only Singapore and Jakarta. The country’s early-stage funding amounts to US$198 million, ranking fourth in the region.
2. Promising Factors of Vietnam’s Startup Market
Vietnam’s startup market holds immense promise due to several key factors. The country’s young and tech-savvy population, coupled with a strong focus on innovation, creates fertile ground for startup growth. Additionally, Vietnam continues to attract foreign investors, with Singapore and Taiwan leading the way in terms of investment. According to the Ministry of Planning & Investment, Singapore remained Vietnam’s top foreign investor, while Taiwan experienced a significant 3.85-fold increase in investment from the previous year.
3. Growing Industries in Vietnam’s Startup Ecosystem
Vietnam’s startup scene is witnessing notable growth across various industries. Financial services emerged as the top sector for investment, experiencing a remarkable growth rate of 248%. Retail, health, and education sectors also secured significant investments, according to the Vietnam Innovation and Technology Investment 2023 Report (published by Do Ventures & the National Innovation Center). The main startup hubs in Vietnam are Ho Chi Minh City (Southern Vietnam) and Hanoi (Northern Vietnam), where a vibrant community of entrepreneurs, investors, and accelerators thrive.
4. Government Support for Vietnam’s Startup Ecosystem
The Vietnamese government has implemented several initiatives to support and nurture the growth of the startup ecosystem. These include tax incentives, funding programs, and incubator and accelerator programs. Noteworthy initiatives include:
- Decision No: 844/QD-TTg, which outlines policies for the development of Vietnam’s startup sector.
- Decision No. 1269/QD-TTg, which establishes the National Innovation Center (NIC) and fosters partnerships with international technology companies like Amazon and Google.
- Decision 939/QD-TTg, encouraging women to engage in entrepreneurship.
- Decision 1665/QD-TTg, promoting entrepreneurship among students.
- Decision 569/QD-TTg, outlining a roadmap for driving innovation in science and technology.
- Decision 3084/QD-BKHCN, establishing the framework for the National Innovation Startup Portal (NISP).
- Decree 95/2014/ND-CP, detailing regulations on funding research and development in science and technology.
- Decision 976/QD-BKHCN, facilitating data collection on innovation in Vietnam through a Business Innovation Survey.
Additionally, Vietnam has attracted significant investments from both domestic and foreign venture capital firms such as 500 Startups and CyberAgent Ventures. The government has also launched initiatives like the Vietnam Silicon Valley project and a startup visa program to attract foreign entrepreneurs.
5. Challenges and Opportunities for Vietnam’s Startups
While Vietnam’s startup ecosystem holds great potential, it also faces challenges. Limited funding and a shortage of skilled talent are key hurdles that need to be addressed. However, with continued support from the government and ongoing development, Vietnam’s startup ecosystem has the opportunity to establish itself as a major player in the global startup landscape.
6. Final thoughts
Vietnam’s startup ecosystem is experiencing rapid growth, fueled by factors such as government support, a young population, and strategic location. With increasing investment, a thriving community of entrepreneurs, and a focus on innovation, Vietnam is poised to become a prominent startup hub in Southeast Asia. By addressing challenges and capitalizing on opportunities, Vietnam’s startups can continue their upward trajectory, contributing to the country’s economic growth and fostering innovation in various sectors.
