Do Ventures General Partners Vy Le (left) and Dzung Nguyen
The year 2019 was “favourable” for the startup ecosystem in Vietnam as it drew US$861 million of investment into 123 venture deals, more than double the number in 2018 (92 per cent YOY growth), according to a new report by Do Ventures.
However, as the COVID-19 pandemic affected businesses in various parts of the world at H1 2020, investment proceeds decreased by 22 per cent from US$284 million in the same period last year to US$222 million.
“This is anticipated as travel restrictions and uncertainties in global financial markets have been disrupting deal-making activities,” the report explains.
The report also noted that in H1 2020, the number of active investors was nearly the same as the previous year, but only a very limited number of new investors entered the Vietnam market as most early stage deals in 2020 have been conducted by local investors or foreign investors with personnel based in Vietnam.
” … While retail continued to dominate the funding amount, this period also witnessed the growth of capital invested in emerging industries such as employment (HR tech) and real estate (proptech). As our daily activities are becoming more touchless for the sake of public safety, we expect the wide adoption of solutions followed by a surge of funding in healthcare, grocery delivery, online education, and entertainment,” the report continues.
To be precise, in H1 2020, retail continued to lead the funding amount with US$64 million. According to the report, this period also witnessed the growth in funding for emerging industries such as employment, real estate, and infrastructure.
“Plenty of dry powder is waiting to be deployed and many investors are looking for new disruptive businesses built upon the New Normal after COVID-19. Positive sentiments are recorded around the potential of healthcare, grocery delivery, online education, and entertainment. As a result, the surge of funding in the above-mentioned sectors in the remaining of 2020 is on the horizon,” it predicts.
What is next for Vietnam?
Based in Vietnam, Do Ventures is an early stage VC firm that invests in companies that are: B2C platforms that complement an effective ecosystem of services around young customers, and global-scaled B2B platforms that create synergies for tier one portfolio companies and enable these companies to scale regionally.
In September, the firm made headlines with its US$50 million Fund I that includes investors such as Naver, Sea, and Vertex Ventures.
So what is next for Vietnam, according to research by the VC firm?
Based on a survey on 50 active funds among six major markets in SEA, Vietnam is the top destination for investment in the next 12 months, followed by Indonesia. This indicates that despite the challenges brought by the pandemic, the market remains a promising ground for investors in the region.
Also Read: Naver, Sea, Vertex invest in Vietnamese VC firm Do Ventures’s US$50M fund I
“Investment sentiment in Vietnam remains high, as surveyed funds are looking to invest in 117 to 200 deals in the next 12 months. Nearly 80 per cent of the investors have planned to deploy one to five deals,” the report writes.
As for the industries, it mentions education, healthcare, and financial services as investors’ favourites for the next year.
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Image Credit: Do Ventures
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