Vietnamese technology startups will make big leaps?

"Southeast Asia Internet Trends in 2019 report", published originally by North Ridge Partners with YellowBlocks’s ownership of its Vietnamese version, has made a reference to Vietnam market landscape: with a large population, Vietnam is a potential market for technology startups, with a substantial possibility of becoming a "new factory of the world". Many shreds of evidence backing up this statement can be drawn, like the burgeoning rise of E-commerce platforms in Vietnam, for instance.

Nonetheless, to become the "New York of Southeast Asia" like Singapore or become an e-commerce market that appeals to most investors in the region like Indonesia, Vietnam calls out for a brisk awakening of young Vietnamese entrepreneurs.

We have not only one but a series of competitive advantages such as a young population, strategic geographic location, political stability, etc. Thus, young startups need to be aware and capture these present opportunities and potentials. Take advantage of it, and supplement those still missing to rise. By this time, the gap in technical expertise and access to the technology of Vietnam compared to the world is hardly difficult to bridge.

In a recent conversation with TheFace Magazine, the heads of the two publishers of "Southeast Asia Internet Trends Report 2019", which are Chris Tran, Head of Asia - Strategy of North Ridge Partners and Doan Kieu My, Founder cum CEO of YellowBlocks, had shed more light on the advantages and impediments that co-exist on the journey to becoming a "startup nation".

The presence of a new “dragon” / the magnetism of the market
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When talking to the uninitiated foreign investors who show their interest in Vietnam, what aspects of Vietnamese internet market that you would draw their attention on?

Chris Tran:

A report named e-Conomy of SEA (Electronic Economy of South East Asia region) published by Google in 2018 once likened the Vietnamese internet economy as a freshly unleashed dragon. Last year, the total foreign capital invested in Vietnam has tripled within a course of one year, which stands as a strong testament to the great attraction of the market.

Vietnam houses a huge advantage of being a new production center heading towards the 4.0 Industrial Revolution and possesses a young consumer market with large-scale digital devices users. The population size of nearly 100 million people also exhibits an ample room for market growth. In particular, the middle-class segment is growing fast in number and spending, with increasing consumer demands and change, which at the same time opens up new opportunities.

In addition, at the macro level, the political system in Vietnam also shows steady stability over time. The government has been actively supporting startups, with more than 2400 startups receiving financial and legal support over the past 10 years.

Kieu My:

The Southeast Asia Internet Trends Report 2019, produced by North Ridge Partners and YellowBlocks, has equated Singapore with "New York of Southeast Asia" that mentioned that it could become a hub for Fintech companies. In the report, Indonesia is said to have the strength of being a huge and potential market for e-commerce. Meanwhile, Vietnam's strength is its ability to become a "new factory of the world". Also, as Chris mentioned, with a large population, Vietnam poses itself as a potential market for technology startups. Evidence can be seen when we look at the fact that e-commerce in Vietnam is also growing very strongly.

In general, for the Vietnam market, we have not only one but a series of competitive advantages such as a young population, strategic geographic location, political stability, etc. The world is seemingly our oyster with plentiful opportunities and potentials in present. The catalyst for success from these awaiting opportunities is the acknowledgment of the young entrepreneurs. Young startups need to acknowledge that they are having unparalleled resources and conditions. Take advantage of it, and supplement the missing things to rise. By this time, the gap in technical expertise and access to the technology of Vietnam compared to the world is hardly difficult to bridge.


In reality, however, the actual number of internet users in Indonesia is much bigger, and Singapore undoubtedly tops the chart in terms of income per capita. Is it possible for Vietnam to appeal to foreign investors when it stands behind the two nations in both criteria mentioned above?

Kieu My:

Investors always make thorough inquiries when deciding to pour their money into a market. Vietnam in their viewpoint is no doubt a new and promising market to explore, given that the Indonesia market is so much of a commonplace market and to a certain extent, saturated. In the "million-island-nation", the competitiveness among startups is too elevated, with many large-scale startups backed with affluent fundings elbowing to seize every piece of the market share. Meanwhile, a majority of Vietnamese startups are almost newly fledged and operated within a relatively modest scale. That’s exactly what the investors are looking for in a developing market.

In particular, what are the prospects for M&A in the field of Vietnamese technology startup?

Chris Tran:

The M&A landscape in Vietnam up to this point is vastly promising, but there’s still a long haul to achieve a certain degree of maturity. The common trend is that the total size of M&A will certainly increase. However, it should be worth noted that most investors will steer their attention to the startup models that have been operating successfully and projecting a bright future. In the time when everything is moving so fast and the market is highly competitive, most investors will prefer to select fewer but well-established startups rather than to pour fundings into many early-stage startups only to "wait for the right time" to grow up and thrive.

Find the “pulse” inside the “dragon” / Ouest for the core of the ecosystem

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The Internet-based technology startup ecosystem in Vietnam has only recently developed. What are the missing pieces in this ecosystem?

Kieu My:

I think that Vietnamese startups are in need of a more internationalized vision. For an ecosystem to develop in a level and simultaneous way, there yields a request for a balance between competition and cooperation. This balance ensures that startups are on a uniform development axis, and production standards have been cultivated. Whatever initiative a startup is incubating, it is required that its products must be able to compete internationally. That is the final beacon that startups need to aim for.


Not only there is a lack of the ability to connect among the existing entities of the ecosystem, but the current scant connections among them are also far from sturdy. How can we address and tackle this current situation?

Kieu My:

The components of the ecosystem (incubations, start-up companies, the government, etc.) have not yet established many mutual partnerships. Given the fact that their resources are abundant, they are still fragmented, separated, and thus have not been gathered together to maximize benefits for all key participants. The cure for the current situation is the emergence of connected communities such as the Startup Vietnam Foundation and YellowBlocks to address those issues, connecting the scattered components in the ecosystem, and working towards building a sustainable ecosystem that benefits every stakeholder within it. And that is also the starting point of why I started with YellowBlocks.


Can you elaborate more on the key deliverables of YellowBlocks in connecting the components of the ecosystem?

Kieu My:

We see ourselves as a bridge between Vietnam's technology ecosystem and hopeful foreign investors. We are dedicated to making Vietnam an attractive destination for those who are finding investment opportunities.

Many venture capital funds still have a plethora of barriers in terms of information and culture when deciding to enter the Vietnam market. They may take up to several months to find suitable investment opportunities or reliable sources of information. YellowBlocks is at the center of the ecosystem, which facilitates our ability to connect and consult with the surrounding stakeholders, with the sole purpose of helping them to utilize the abundant resources and bringing solutions to their attendant concerns.

So, what benefits will the cooperation between North Ridge Partners and YellowBlocks provide to the startup ecosystem?

Chris Tran:

YellowBlocks là "cửa ngõ"YellowBlocks is the "gatekeeper” into Vietnam’s tech startups and has a strong connectivity base in this market. Meanwhile, North Ridge Partners is an independent investment bank that specializes in investment consulting, legal, and cash flow for venture capital funds in many countries.

YellowBlocks not only thrives in the Vietnam market but has also established business relationships in 40 different countries. While North Ridge Partners, on the other hand, is based in Singapore and Australia and has been investing in many other places like Indonesia and China... Therefore, the combination of both companies is an unprecedented opportunity for each party to complement each other’s strengths and weaknesses, just like the right and left hands of the same body.

Unleash the Dragon

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Let’s dig a bit deeper into it, there subsist a great many specific impediments in the startup ecosystem in Vietnam. Off the top of everyone’s mind, it is probably about capital. Are there any difficulties in terms of attracting capital investment?

Kieu My:

Personally I think the main issue that needs to be addressed is quality. As I just mentioned, investment funds when entering Vietnam will favor startups that are well-thought-out and have operated quite successfully. However, this number is not substantial and they usually have established a strategic alliance with their investors. Meanwhile, younger startups may not yet reach the growth potential that most investors expect.

In fact, there are cases where the startups ask for 30-45 minutes to present their ideas to potential investors, but it only takes these seasoned “sharks” two minutes to see if you are a fit piece for them or not. When even when you get rejected, it does not mean that your startup is futile or irrational, it is just that your startup has not lived up to their expected requirements.


What support have North Ridge Partners and YellowBlocks given so far to facilitate capital inflows for the Vietnamese market?

Chris Tran:

Last year, we co-published the "Southeast Asia Internet Trends Report 2019", which provides a concise look at the technology market in the region - with technology strategies tailored to each specific geographic feature, investors, and companies in each market.

We also provide a wide number of news hotspots, on the most updated trends and the technical and business-related know-hows, and analyses of notable businesses. Of course, this report doesn't cover everything that is going on out there, but we hope it will help open up more exchanges and discussions among the stakeholders of the startup ecosystem.

Kieu My:

In addition, YellowBlocks and North Ridge Partners are planning to organize investment tours for international investors intending to seek investment opportunities in Vietnam. These are exclusively designed programs, only for the invited people with a small group of between 20 and up to 25 people. In the program, they will have the opportunity to learn and connect with potential technology startups, whom we have made rigorous selection rounds and decided to nominate.


In addition to capital issues, does the conflict between the old and new business models in Vietnam also seem to have not reached common ground and easily leads to controversy?

Kieu My:

There will always be contradictions between the old and the advanced. And let’s make it clear that there is certainly no solution to radically resolve these conflicts. The important thing here is to identify the right "pain point" that exists in the traditional model, where customers still feel a sense of insufficiency but their needs are not fully met. Only until then that the new business model will come as their rescue to address that needs for them. However, the new approach of a startup must bring a lot of useful and significant convenience to users for them to perceive the transition as worthwhile.


The government has also been more involved in breaking down barriers for startups, proceeding towards becoming a “startup nation”. What do you think about this positive point?

Kieu My:

Over the past three years, the startup community in Vietnam has expected a bright future when the government has been enacting several projects that act as catalysts for Vietnamese startups surge such as the issues of Project 844 and Decree 38/2018 / ND-CP. But in reality, the benefits supposedly stemming from these enactments are easily realized because "attached" to it is often a bunch of policies that are not easily comprehensible. That is not to mention that the investors must go through many stages of paperwork to get there. It is very difficult for startups to face these regulations without proper professional support. Therefore, the startup community is in desperate need of a lookup system, or a legitimate legal portal, that is user-friendly and reliable.

Earlier this year, the Government of Vietnam announced that in the 10-year period from 2021 to 2030, Science, Technology, and Innovation will be one of the three core pillars of competency and leverage for the national economic development. Hopefully in the near future, with the support from the Government, the active participation from businesses, the cooperation of communities in the technology ecosystem, and the arising startup trend in Vietnam, we will witness the prolific emergence of unicorns as well as successful tech startups.


Vietnam’s bustling startup scene currently has just one unicorn, what’s your forecast on the advent of the next?

Chris Tran:

There will be not one, but a whole group of unicorns in the next emergence, just as how the story planned out with Indonesia. Five years ago, many investors started pumping their money into these early-stage startups, which have later on developed into series-A, series-B, and series-C fundings.

Currently, in Vietnam, there have been prominent names in series A, B, C fundings. Although without a hundred percent of certainty, I predict the next unicorn will be traced from e-commerce or other consumer-related fields (which is B2C segment), as these businesses can meet the basic needs of the consumers.


However, the number of unicorns is just one of the various criteria to evaluate the maturity of the market. What aspects of the Vietnam Internet market that need sufficient and comprehensive development?

Kieu My:

I agree that the presence of unicorns is nothing more than a beautiful “badge”. We need more coequal development rather than having a few outstanding individual factors in a pool full of less competent ones. Investors who enter a new market do not give that much thought about the number of unicorns, but rather the total amount of investment capital poured into the market with a wider range of recipients.

And if a market receives abundant capital but the recipient list only shows two to three names that get funded year after year, which marks a dire scarcity of potential newcomers and a lack of diversity in the ecosystem, then that might register a concern about the wellbeing of that ecosystem


What are the visions of North Ridge Partners and YellowBlocks respectively when operating in Vietnam in the near future?

Chris Tran:

Southeast Asia countries are catching up with the novel technology wave at a much faster rate compared to those in the Western hemisphere, thanks to many accommodating initiatives of the governments, the stable Internet connection at affordable prices, and a large and dynamic young population. The booming Internet economy has helped Southeast Asia to leap beyond the confinements of traditional industries to enter the digital market with the cultural and economic development opportunities that we have been longing for the past one or two generations.

In a broader perspective, Asia is indeed an incubator for "Technology Unicorn" with the presence of 14 successful unicorns currently residing in Southeast Asia. If we take a closer look at the Chinese market with more than 200 unicorns at the moment, we will see that the duration over which unicorns are developed has been reduced from 20 years to only 2 years. We anticipate that the number of unicorns in Asia will continue to grow rapidly as more and more investors come to the region due to political stability and great potentials for economic growth.

Prior to my conclusion, we would also like to express our sincere thanks to Doan Kieu My (Kimiko) and YellowBlocks for their unrelenting support and cooperation to promote the development of the Internet market and technology ecosystem in Vietnam.

Kieu My:

Southeast Asia is the new home for unicorns and many technology startups, especially Vietnam and Indonesia, which are two markets that have recorded many breakthroughs in the wave of developing digital economy compared to the other countries in the region.

Vietnam is uncovering its traditional clothes to catch up with the most updated technology, transforming from being one of the poorest countries in the world thirty years ago, to one of the fastest-growing economies in Southeast Asia. This unprecedented transformation needs the cooperation of many units in the ecosystem, especially when the Vietnamese government officially recognizes that Science, Technology, and Innovation is one of the main pillars for the development of Vietnam's economy.

YellowBlocks is the first business unit in Vietnam working on consulting and building an emerging technology ecosystem, acting as a bridge to shorten the gap and connect available resources and collaborations from more than 120 partners in 40 countries. We believe that what we are relentlessly pursuing every day is one of great significance, which is to figure out how to bring to the table more opportunities to develop and unleash the potentials of the Vietnamese economy landscape and its components to the fullest.

We are deeply honored to take our partition to contribute to the launch of the Southeast Asia Internet Trends Report 2019 in the Vietnamese language. At the same time, we really appreciate the strategic cooperation between North Ridge Partners and YellowBlocks. This cooperation has helped solidify the fact that Vietnam is an ideal destination for the investment and development of the technology ecosystem and entrepreneurship in the Southeast Asia region.

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