What’s up with Vietnam’s valuation gap?

Although I’m quite bullish on Vietnam in the next few years, given the strength of the technology, ecosystem, and markets, there is still a worrying gap in Vietnam’s company valuations. Over the years, Tech In Asia has slowly been tracking all the investments and rumored valuations in Vietnam. But since very few have disclosed their numbers publicly, we can only make educated guesses on Vietnam’s actual performance. At best, we hear that VNG’s valuation is around $1 billion and VC Corp is at $125 million and Vat Gia is around $75 million. Take these valuations with a grain of salt. FPT, in its latest annual report, stated that its current valuation is $777 million. But we’ve heard the numbers so often, we’re inclined to think they’re approximate. The rest of the ecosystem is even further below with a handful of companies around $10 to $40 million. And then, there’s the very young generation of companies between $1 million to $5 million valuations.

It must be said here that the pipeline from seed to series B in Vietnam is the healthiest its ever been. Startups are thinking more regionally, their technology and business are excellent, and their leadership is strong. In three years, a handful of these companies will likely become regional giants. Foody.vn is an obvious picture of this.

But there’s this ominous gap between VC Corp and VNG. Where are the companies at $200 million, $500 million, etc.? This may be worrying for outside observers.

My sense is that Vietnamese companies that compete locally, unless they’re profoundly diversified, cannot make it to larger valuations. In this earlier set of companies, they didn’t look outside Vietnam for markets and therefore were consistently hitting thresholds in each new market segment they entered from entertainment to ecommerce to communications. Look closely at all of Vietnam’s top performers and you’ll see that they don’t have just one product line. They’re invested across a number categories that are big across the region but only million dollar businesses in their own right in Vietnam only.

Why do you think Vietnam has this gap? What’s preventing other companies from reaching even a $300 valuation in Vietnam?