Down but not out: Tech winter not slowing this VC’s Vietnam ambitions

Funding in Southeast Asia is down, with the region’s startups raising just US$5.5 billion in 2023 – a significant dip from the US$8.4 billion raised the year before.

However, while the funding winter rages on, Vietnam appears to be weathering the snowstorm. The country has seen startup investments rise consistently since 2018, peaking at US$1.9 billion in 2021. While funding has taken a hit since then, Vietnam’s startup ecosystem still bagged the most amount of funding in Southeast Asia in 2023. The market came in third after Singapore and Indonesia, according to Tech in Asia data.

This growth speaks to Vietnam’s potential as an ecosystem, being home to a young, well-educated population that’s tech-savvy and excited about the benefits of digitalization. Indeed, investors are starting to take notice.

Justin Nguyen, partner at Monk’s Hill Ventures / Photo credit: Monk’s Hill Ventures

At our upcoming Saigon Summit, speakers from some of Southeast Asia’s leading VC firms will discuss the investment environment in Vietnam.

Ahead of the event, we hear from Monk’s Hill Ventures partner Justin Nguyen to get his perspectives on the opportunities the market holds and why he’s excited about Vietnam.

The following interview has been edited for clarity and brevity.

What do you do at Monk’s Hill Ventures?

Invest! Simply put, we invest in the most ambitious tech founders in Southeast Asia. At our core, we believe that technology can help better the lives of millions in the region, so we spend a lot of our day-to-day working with some of the most ambitious tech founders in Southeast Asia to help them build and achieve their ambitions.

This includes companies that we’ve funded – like Elsa and Jio Health here in Vietnam – but also non-portfolio companies at various stages in their journey throughout Southeast Asia.

The partners at Monk’s Hill Ventures / Photo credit: Monk’s Hill Ventures

In addition to our investment and portfolio management duties, the partners of the firm (of which I’m one of four) are also responsible for the overall management of the firm. This includes setting its strategic direction, managing relationships with limited partners, overseeing the firm’s operations, and mentoring staff.

What do you think about the current funding environment in Vietnam?

There’s no doubt about it: The funding environment in Southeast Asia is tough. The headlines are that 2023 funding in the region is down nearly 50% from 2022 levels.

The good news is that Vietnam has been more resilient, only seeing a 10% dip in the same period. This indicates that investors remain attracted to the market’s robust economic growth, young skilled population, and its huge services industry that’s ripe for “technification.”

If we zoom out, this is largely true for the entire region, so there’s actually a lot to be optimistic about. In fact, I believe the next decade will be even more interesting than the previous one. Seventy percent of Southeast Asia has just entered or is about to enter the magical US$4,000 per capita gross domestic product (GDP) mark where necessities are no longer a struggle and discretionary spending happens. Indonesia got there in 2021, Vietnam got there in 2022, and the Philippines is close behind. That’s 500 million people that are just starting to save and finally have the discretionary income to really consume.

Why are you excited about Vietnam as a market?

Market attractiveness is ultimately about macros and people. Are the market fundamentals going to produce sizable opportunities and does the human capital exist to answer those opportunities? And I would argue that the answer is a solid yes to both in Vietnam.

On the macro front, we have a fast-growing consumer market with a burgeoning middle class. Our domestic consumption contributes to over 50% of our GDP, and we are on track to become a top 10 consumer market in the world by 2030. As demand rises, this will fuel multiple sectors – from technology products to healthcare, education, energy, and services, many of which are well positioned for technification. These developments will create fertile ground for more startups to grow and thrive and possibly set the foundation for them to expand beyond Vietnam. We are seeing early signs of this.

Photo credit: Sean Hsu / Shutterstock

On the people front, the population is young, tech-savvy, and ambitious. Domestically, Vietnam produces roughly 100,000 engineers per year, accounting for about 40% of university graduates.

Additionally, although Vietnam accounts for less than one-sixth of the region’s population, nearly half of Southeast Asia’s college and university students in the US are Vietnamese. In other words, Vietnam sends more students to the US than Indonesia, the Philippines, and Thailand combined. This largely young, educated population, plus a sizable returning diaspora, are the people ingredients necessary for an explosion in tech innovations.

What advice do you have for founders looking to start up in Vietnam?

Get started! Figure out your big problem to solve, have unit economics that are solid, develop go-to-market strategies that are scalable, and just go for it.

What will you be speaking about at Tech in Asia’s Saigon Summit and why is it important?

The headlines are filled with doom and gloom, so I want to remind founders that economic downturns are a great time to start companies and help shed some light on what venture investors are looking for when evaluating companies.

Many of today’s tech giants – including Airbnb, Uber, and Slack – were founded around the time of the 2008 financial crisis. It’s no wonder why, as talent is more abundant and often more affordable, there’s less competition due to the perceived risks, and people and companies alike are encouraged to look at innovative solutions that reduce costs or improve efficiencies.

Hear from Justin, as well as a host of other exciting speakers, at Tech in Asia’s upcoming Saigon Summit. Held on May 30 at GEM Center, Ho Chi Minh City, we’re bringing together some of Southeast Asia’s best and brightest to chart Vietnam’s tech future together.

Get your tickets to Saigon Summit today.

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This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.