Vietnam through the eyes of local startups

With a population of 90 million, Vietnam is the third largest market in Southeast Asia after Indonesia and the Philippines. Like its counterparts, Vietnam is also home to a lot of young people, approximately 40 percent of whom are less than 25 years old. This growing population of young people will likely be the next generation of consumers and bring big opportunities for entrepreneurs tapping into this emerging market. The country is also well-connected, with 50 percent of the population on the internet and more than a third using smartphones.

But while some may think Vietnam has a largely homogeneous ethnicity, there are distinct subcultures that impact the way startups work in the country.

So how does one navigate around Vietnam? And what is the local startup ecosystem like? I asked local entrepreneurs and Vietnam ecosystem experts Son Le Thanh and Anh-Minh Do for their insights.

Northerners and southerners

Before diving into the Vietnamese startup ecosystem, we must first understand its history.

The Vietnam War that ended in 1975 brought about two distinct groups: the northerners that originated in Hanoi, where the government seat of power is located, and the southerners that lived in Ho Chi Minh City (HCMC).

There are cultural differences between the two. According to Son, who was born and raised in Ho Chi Minh City, southerners tend to be more open-minded, pro-business, and are direct in doing business. On the other hand, northerners emphasize political connections as a key strength (given their proximity to the government seat of power) before engaging in business.

Khoi Nguyen, the founder and CEO of WeFit, agrees with this assessment. He sees HCMC as a place for startups doing end-customer services, while Hanoi is for startups with more political affiliations.

Singaporean Alvin Koh, the founder and CEO of Hanoi-based Peko Peko, has been in Vietnam for over three years. He observed that northerners are generally better at studies, have the habit of saving money, and are more conservative, whereas the southerners are more dynamic, willing to start up, and spend as they earn.

From my conversations with Vietnamese entrepreneurs, there is a disparity. Northerners tend to view themselves as more cultured and refined, with a penchant for formalities, metaphors, and sarcasm—even in their daily speech. “Northerners are [also] afraid of change, which makes it a difficult market to adapt to technology,” said Duong The Vinh, the co-founder and CEO of HCMC-based Cititech. “I noticed Hanoi-based companies who would rather go global from the start than to test their product in Hanoi [as the beachhead market].”

Viet Kieu and the overseas educated

To add to the diversity, the Viet Kieu, the diaspora who left Vietnam during the war, are returning after receiving word of the country’s current opportunities. A report showed that an estimated 1.5 million Viet Kieu live in the US alone, with many more in other countries. Their return is a driving force in the Vietnamese economy, as they contributed an estimated US$12.3 billion in remittances in 2015.

They not only bring money but also the entrepreneurial skills and connections that come with it. One such example is Sonny Vu, a Vietnamese-American who founded MisFit Wearables Corp, which was acquired by Fossil Group for US$260 million. Another is Binh Tran, co-founder of Silicon Valley-based Klout, who now runs 500 Startups’ Vietnam fund.

“Let’s also not forget the Vietnamese who were educated overseas and are contributing back to the startup ecosystem,” added Son. A report written by Anh-Minh Do, former managing editor for Tech in Asia in Vietnam, substantiates his views.

According to Anh-Minh, the overseas educated have an edge over the Viet Kieu:

Opportunities in the Vietnamese market

Challenges faced by entrepreneurs

Advice to startups

Conclusion