Vietnam in 2015: a light at the end of the tunnel

I’ve been covering the Vietnamese startup scene for the last three years, and I can tell you, it’s been through hell and back. When I first arrived in December 2012, my first article was on the fall of Nhom Mua, a very controversial daily deals site that was rumored to be pulling in $2 million in revenue per month (it was acquired last year by a local competitor). In the aftermath, Vietnam’s startup scene reeled. But it remained resilient.

From 2013 to 2014, Vietnam’s ecosystem gave birth to multiple projects from HATCH, a social enterprise for startups, to Saigon Hub, formerly Vietnam’s largest co-working space. Bostered by the fervor of 2013, Vietnam’s startup scene was quite confident and further inflated when Flappy Bird burst onto the world stage. No moment in Vietnam’s startup history for the last ten years could be so monumental and magical. I heard of tens of university kids and engineers leaving their jobs or starting up projects just because they were so inspired by Nguyen Ha Dong. Nguyen really did ignite an industry.

But as the dust settled in Vietnam, reality set in. HaiVL, Vietnam’s top humor site, was shut down by authorities. And VC Corp, one of Vietnam’s most promising content platform companies, was embroiled in an internal meltdown that saw its data centers shut down.

It’s thus that Vietnam’s startup community entered 2015 on a somber and more careful note. Startups, if they’re good, have been hush-hush, not interested in letting me release news about funding nor even sharing their latest products. And yet, Vietnam seems to be an engine that doesn’t stop. What I’m seeing and hearing on the ground lately is a very deep resilience.

Vietnam’s onslaught of investors

There are a few things that outsiders overlook when researching Vietnam’s startup ecosystem:

• Vietnam’s engineering output is likely the top in the Southeast Asian region, despite the size of its larger neighbors like Indonesia and the Philippines. In the past decade, Vietnam has quickly become the place to go to look for software outsourcing, client work, and electronics manufacturing.
• Its startup scene is much older than its neighbors, having truly started with the founding of FPT in the 1980s and the initial entrance of IDG Ventures Vietnam in the early 2000s.

For insiders, these are things that Vietnam has taken for granted. And it’s possible there’s one larger aspect about Vietnam you wouldn’t expect: there’s a lot of money here.

In the past 6 months, I’ve personally met at least 20 new angel, seed fund, and venture investors in Vietnam that are keen to invest into early stage Vietnamese tech startups. This might be a result of a few things:

• An overall feeling that Vietnam hasn’t lived up to its technology and startup potential
• An economy that seems to be bouncing back from an almost decades-long recession
• The Vietnamese government seems to be enacting new decrees that are favorable to business, with likely more to come
• Potential for Vietnam to go through further favorable changes in politics and economy entering 2016, that has business cautious yet also optimistic, especially with a potential signing with the Trans-Pacific Partnership on the horizon
• It’s simply just ripe after all the events from 2012 to 2015 OR
• It’s simply just ripe after all the events from 2004 to 2015

Whatever the reason for the new flourishing of investors into Vietnam, it’s clear that the money is here. The question is: where are the startups?

Rock, paper, scissors

Vietnam’s greatest asset has always been its technology, and many observers of Vietnam say that Vietnam is very entrepreneurial. I’ll always hear people say, “I mean, look at all the shops and restaurants lining the streets of the cities of Vietnam.” But I think that’s a bit shortsighted. Although Vietnamese people are seemingly entrepreneurial, it doesn’t mean they have the depth and skill to build out unicorns. It just might be that Vietnam lacks synergy in business and technology. Too often I’m meeting engineers who are desperate to find business development people and even more often I’m meeting business people with an idea but no CTO. These simple fundamentals limit the potential of the early stage startups in Vietnam. And this gets to the heart of Vietnam’s handicap: Vietnam is scissored between very weak super early stage startups at the bottom and a lack of series A and above investment at the top.