Vietnam is one of Southeast Asia’s most exciting and dynamic markets.

With its fast-growing economy, youthful population, and rapid digital adoption, Vietnam offers fertile ground for innovation. The country’s tech-savvy workforce and thriving entrepreneurial ecosystem make it an attractive destination for startups to explore new markets and forge strategic partnerships.

Why Vietnam?

Vietnam’s startup ecosystem has been gaining significant traction in recent years. The country has climbed the global startup rankings from 58th to 56th in 2024 (Hoa, 2024), and its economy continues to grow at an impressive rate. In 2022, Vietnam experienced the highest growth in Southeast Asia’s digital economy, with a remarkable 28 per cent increase in the Gross Merchandise Value from US$18 billion in 2021 to US$23 billion in 2022 (Dharmaraj, 2022).

Corporate innovation in Vietnam

One of the key challenges facing Vietnam’s innovation ecosystem is the limited funding from large corporations, which hinders the growth of startups and the overall development of the ecosystem. 

Startups often begin by addressing niche markets or innovating in areas that larger players overlook. However, as they grow, they inevitably find themselves up against established, well-resourced corporations.

Rather than viewing these corporations solely as competitors, startups can adopt a collaborative approach to accelerate growth. Partnering with corporations provides access to broader networks, distribution channels, and resources. These collaborations allow startups to tap into corporations’ extensive resources, including their established customer base, distribution networks, and operational expertise, which can significantly reduce the time and effort required to scale.

For corporations, the benefits of such alliances extend beyond access to innovation; they gain fresh perspectives that can help challenge the status quo and encourage out-of-the-box thinking, which is often difficult to foster internally. Startups, being agile and resourceful, bring cutting-edge solutions to traditional industries, enabling corporations to stay competitive in an ever-evolving market. In turn, startups can leverage a corporation’s credibility and market influence to increase their visibility, acquire larger contracts, and attract more investments.

Furthermore, these partnerships can create synergies where corporations provide capital and operational infrastructure, while startups contribute innovation and flexibility. This co-creation model can lead to the development of new products, services, and business models that neither party could have achieved independently. By focusing on collaborative growth, rather than competition, startups can enhance their chances of long-term success, with corporations playing a pivotal role in their accelerated trajectory toward profitability and market leadership.

Also Read: All you need to know about the fintech boom in Vietnam

The Open Innovation & Technopreneur Institute (OITI) promotes technological entrepreneurship by encouraging collaboration between startups, industries, and research institutions through open innovation. It offers educational programs, mentorship, and incubation to help entrepreneurs scale tech-driven businesses across sectors such as fintech, healthtech, and greentech. Ultimately, strategic partnerships create a win-win scenario: startups gain the scale and market access they need to grow, while corporations stay relevant and innovative in an increasingly disruptive landscape.

Case study

An example is Society Pass’ acquisition of Gorilla Networks marks a strategic move that benefited both companies by combining their strengths and resources to thrive in the rapidly evolving tech ecosystem. Society Pass, a Vietnamese tech company, has established itself as a key player in the Southeast Asian market by focusing on building a strong network of technology-driven businesses. 

By acquiring Gorilla Networks, a Web3 Mobile Virtual Network Operator (MVNO), it not only diversified its portfolio but also gained access to the disruptive innovations and technologies that Gorilla Networks brought to the table.

For Society Pass, the acquisition allowed them to break into the Web3 and blockchain-enabled telecom space, which is a growing area of interest for tech-forward companies. The Web3 component of Gorilla Networks’ offerings introduced decentralised and user-centric telecom services, creating new revenue streams for Society Pass and enabling them to capture a niche market segment. This move also expanded Society Pass’ technological capabilities, providing them with a unique edge over competitors and positioning them as a leader in integrating next-gen technologies with traditional services.

On the other hand, Gorilla Networks greatly benefited from the acquisition as it gained access to the broader resources, operational infrastructure, and market reach of Society Pass. With a larger company backing its operations, Gorilla Networks could scale its innovative offerings—such as token-based mobile services—much faster than it could independently. 

The infusion of capital, human resources, and strategic guidance from Society Pass enabled Gorilla Networks to accelerate product development, enhance customer acquisition efforts, and expand its market footprint beyond Singapore into the larger Southeast Asian region. In fact, Gorilla Networks initiated their Vietnam entry through the Global Innovation Alliance (GIA) Ho Chi Minh City Acceleration Programme supported by EnterpriseSG and Singapore Economic Development Board. The GIA is one of the many types of support that Singapore-based startups can tap into.

Also Read: How early-stage deep-tech startups can attract and retain the right talent

The acquisition of Gorilla Networks by Society Pass created a more robust and diversified entity that could better withstand market fluctuations, embrace technological disruptions, and capture emerging opportunities in the region’s fast-growing digital economy. It served as a growth catalyst for both Society Pass and Gorilla Networks, allowing each to leverage the other’s strengths to achieve long-term success and cement their positions within the competitive tech ecosystem.

What’s next?

OITI will be organising Open Innovation Day on 25-26 October, 2024, in Ho Chi Minh City, where Quest Ventures is a co-organiser among others. Startups that are interested in working in corporations in Green Agriculture, Smart Industry, and Green Urban Living sectors are highly encouraged to attend. Who knows? This could be the seed of the next success story after Gorilla Networks.

This article is co-authored by Avryl Tan,Venture Capital Analyst at Quest Ventures

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Japanese proptech startup estie has closed a JPY 2.8 billion (approximately US$20 million) Series B round of investment led by Vertex Growth, a growth-stage VC fund anchored by Vertex Holdings, a subsidiary of Temasek, and Development Bank of Japan (DBJ).

Existing investors Globis Capital Partners, University of Tokyo Edge Capital Partners, and Global Brain also participated.

Also Read: Real estate sales development: Unlock the power of partnership and collaboration

estie will use the money to accelerate its multi-product strategy, facilitate strategic M&As, and recruit top talents. The proptech venture also plans to expand its presence in Southeast Asia, starting with Singapore.

Japan boasts one of the world’s largest real estate markets, anchored by Tokyo (the city with the largest real estate asset value). Japan ranks third in the international commercial real estate market after the US and China.

Despite the large asset pool, Japan’s access to global capital is limited by data availability that foreign investors are accustomed to elsewhere.

According to JLL’s Global Real Estate Transparency Index 2024, Japan ranks thirty-first when it comes to market fundamentals data availability, quality, depth and transparency.

Founded in 2018, estie provides real estate developers, institutional investors, and others with services that facilitate industry transactions. By solving the data distribution challenges faced by the commercial through digitalisation, the real-estate industry solves a series of business issues by providing multiple interoperable services simultaneously.

Also Read: Former top Vertex exec Jiang Honghui joins 17LIVE Group as CEO

Tam Hock Chuan, General Partner at Vertex Growth, said: “What Bloomberg has achieved for the financial industry, we believe estie is doing for the Japanese real estate sector.”

“Despite the volatility in the SaaS industry, estie, has consistently delivered high growth rates, best-in-class efficiency metrics, and outstanding customer satisfaction scores. Given its success in Japan, we are confident this business model can be adapted to various markets across Southeast Asia.”

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ChatGPT’s parent, OpenAI, has established a presence in Singapore and plans to open an office later this year to capitalise on the growing demand for advanced artificial intelligence tools in the Asia Pacific.

Singaporeans are some of the highest per capita users of ChatGPT worldwide, with the number of weekly active users doubling since the beginning of the year.

Also Read: With AI comes huge reputational risks: How businesses can navigate the ChatGPT era

The tech giant has already started building a team in the city-state to support customers and partners throughout the region and strengthen relationships with local and regional governments, businesses, and institutions. As part of the plans, it has appointed Oliver Jay as Managing Director for International. Based in Singapore, Jay will oversee OpenAI’s international operations and global expansion.

OpenAI will work closely with Singapore government partners, such as the Economic Development Board (EDB), to support the country’s local AI ecosystem and help shape an AI-powered future that benefits everyone.

As a first step in that commitment, OpenAI has partnered with AI Singapore to make advanced AI more widely accessible across Southeast Asia.

Through the partnership, OpenAI will provide up to US$1 million to help develop resources, including open datasets, to ensure AI models are better suited to Southeast Asia’s diverse languages and cultures.

“Singapore, with its rich history of technology leadership, has emerged as a leader in AI, recognising its potential to solve some of society’s hardest problems and advance economic prosperity. We’re excited to partner with the government and the country’s thriving AI ecosystem as we expand into the APAC region,” CEO Sam Altman said.

“OpenAI’s decision to establish a presence in Singapore, its hub in APAC, underscores the strength of our growing AI ecosystem, fuelled by the government’s investments in AI talent, AI compute and AI demand by enterprises. As part of Singapore’s National AI Strategy 2.0, Digital Industry Singapore (EDB, ESG and IMDA) fosters collaboration between AI innovators and Singapore-based enterprises so that they can harness innovation for productivity and growth. We look forward to the multiplier effects of this move, sparking new collaborations and bringing more leading-edge AI companies to our region,” said Jacqueline Poh, MD of the EDB.

Also Read: AI assistant or replacement? A PR pro’s take on using ChatGPT

On November 21 this year, OpenAI will host its first Developer Day in Singapore, bringing together the region’s flourishing community of developers and startups building AI’s future.

Last week, OpenAI raised US$6.6 billion from investors, including Thrive Capital, Khosla Ventures, Microsoft, Nvidia, and SoftBank, at a US$157 billion valuation.

The New York Times recently reported that OpenAI is planning to raise the price of individual ChatGPT subscriptions from US$20 per month to US$22 by the end of the year. A steeper increase will come over the next five years; by 2029, OpenAI expects it’ll charge $44 per month for ChatGPT Plus.

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Indonesian e-commerce giant Bukalapak has responded to a report by local media about a potential acquisition by Chinese e-commerce company TEMU, which circulated earlier this week.

In a letter to the Indonesia Stock Exchange (IDX) reviewed by e27, the company stated that it was “not aware of any information regarding its acquisition plans by TEMU (a China-based company).”

“In relation to the aforementioned response, the company will disclose information in accordance with applicable laws and regulations once it receives verified details regarding the acquisition plan,” wrote Bukalapak Corporate Secretary Cut Fika Lutfi.

It also commented on Monday’s share price increase, which coincided with the release of the report.

“The increase in share price on October 7 reflects the market’s reaction to unverified information regarding the company’s acquisition plans, which has not been confirmed by the company’s management. Market speculation is beyond the company’s control,” she said.

Also Read: Vertex Growth invests in Japanese proptech startup estie’s US$20M round

“Therefore, the company advises public shareholders and investors to observe official disclosure of information by the company before making any investment decisions on the company.”

In July, Bukalapak reported that its revenue for the second quarter grew six per cent quarter-over-quarter to IDR1.2 billion (US$76.45 million).

The company stated that its adjusted EBITDA for the second quarter was IDR41 billion, which improved by IDR84 billion year over year.

In the same month, DealstreetAsia wrote that Singapore’s sovereign wealth fund GIC considered selling its minority stake in Bukalapak.

According to the report, the discussions are in the preliminary stages. GIC has not yet decided whether to hire bankers for the sale or handle it internally.

GIC and Bukalapak declined to comment on the potential divestment when contacted by DealstreetAsia.

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Image Credit: Bukalapak

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In Western markets like the US and Europe, startups often prioritise fast scaling because customers are ready to pay for innovative products. But in Southeast Asia, things work differently. Founders can’t simply assume that their market will pay, even when there’s interest in the product. We’ve seen many startups in these countries present enormous market sizes, only to realise later that a large portion of the market isn’t ready to convert into paying customers.

For example, in Indonesia, startups need to carefully assess how much their target customers are actually willing to spend. It’s a diverse market with both high-income urban populations and lower-income rural areas, meaning the ability to pay varies greatly. In Vietnam, the story is similar, where consumer behaviours and preferences can differ widely between regions, making it critical for startups to understand local nuances before scaling too quickly.

Why profitability comes first in Southeast Asia’s largest markets

While growth is always the goal, startups in Vietnam and Indonesia must focus on profitability from the start. In Indonesia, particularly, many founders discover that while users are willing to try out a product or service, converting them into paying customers is a different challenge.

A great example is e-commerce, where the competition is fierce, and profitability margins can be razor-thin. The challenge isn’t just attracting customers but converting them into paying users who return frequently. Startups must invest in building trust with their customers, which often takes time and localised approaches.

Also Read: Challenges of AI development in Vietnam: Funding, talent and ethics

Similarly, in Vietnam, where many startups are targeting sectors like fintech and edutech, we’ve seen incredible enthusiasm from founders, but many still struggle to present a clear path to profitability. We’ve spoken with some companies with impressive growth stories, but when asked about long-term monetisation, the answers were vague. It wasn’t enough to have thousands of users—they needed to prove they could convert free users into paying subscribers by offering something valuable that couldn’t be found elsewhere.

Gen AI: Expanding opportunities

Generative AI (Gen AI) is opening up new possibilities in Southeast Asia, offering startups a chance to innovate in previously unimaginable ways. In Vietnam’s agricultural sector, for instance, where traditional farming methods are still widely used, AI-driven tools are being employed to help farmers optimise crop yields and reduce waste. This not only boosts productivity but also makes farming more profitable, enabling agritech startups to tap into previously underserved markets.

In Indonesia’s healthcare sector, Gen AI is helping bridge the gap in underserved regions. With limited access to medical professionals, AI-powered diagnostic tools are now assisting doctors in providing remote consultations. Healthtech startups are using AI to expand their reach into rural areas, offering affordable services that were previously inaccessible. But while AI opens doors to larger markets, startups still need to focus on building sustainable business models. AI can help lower costs and drive efficiency, but it won’t automatically turn potential customers into paying ones.

While these innovations are exciting, founders in both Vietnam and Indonesia should remain cautious. Even though Gen AI has the potential to expand the Serviceable Available Market (SAM) by reaching underserved populations, it doesn’t guarantee profitability. Founders still need to keep a close eye on costs and ensure that their products or services provide real, tangible value to paying customers.

Also Read: Report: 46% of Indonesian businesses unprepared for AI-generated fraud despite risk knowledge

The path forward for startups in Vietnam and Indonesia

The key takeaway for founders is that growth and profitability must go hand-in-hand. While the opportunity to scale is immense—especially with the help of technologies like Gen AI—startups need to stay focused on proving their value early on. Building a strong foundation of paying customers, understanding local market dynamics, and using AI to drive efficiency are crucial steps toward sustainable success.

Investors are watching closely, and the startups that thrive in these markets will be the ones that can balance innovation with sound financial strategies. Whether you’re operating in Vietnam’s booming tech sector or navigating the dynamic Indonesian market, a clear path to profitability will always be the cornerstone of long-term success.

This article is co-authored by Karina Sulistyo, Senior Associate, Investments at Capria Ventures.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

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