Want a recap of what were the most notable developments in the Vietnam tech startup scene in 2016? Here is our list. If you agree, give it a like and share.
The rise of co-working spaces
In late 2015, Toong and Dreamplex arose as Vietnam’s first co-working space chains, one in Hanoi and one in Ho Chi Minh City – the busiest cities in Vietnam. It was followed by the birth of several other co-working facilities across the country in 2016. The year also marks the expansion of Toong and Dreamplex, and a new player called Up, which has launched a hub within the campus of the Hanoi University of Science and Technology.
In a fledging startup space like Vietnam, which has just started to build an ecosystem, the availability of such entities is one of the big boosts. Primarily a space for tech entrepreneurs and individuals to work and gather, co-working space in Vietnam has also proven to be a business model that attracted investors.
The largest chains are all backed by investors in the tech and real estate industries. While Toong and Up announced their successful million dollar fundraising rounds, Ho Chi Minh City-based Dreamplex was founded by a local real estate developer.
While small co-working space outlets had been available in the country a few years back, they had been mainly the space for expats, being not fully utilized until the concept of tech startups became widespread.
Undeniably, the growth of the co-working spaces is an indicator for the vibe of the Vietnamese startup ecosystem.
The Ricebowl Startups Awards, which has been present in the emerging economic region for the second year this year, came to Vietnam in 2016 as the first event to make the recognition of startups and individuals that have been contributing to the local innovation space.
Harley Trung, a Yale University’s computer science graduate and co-founder of Vietnamese courses provider for developers CoderSchool, won the regional finale for the “Best Developer” category, after he was awarded the Vietnam prize for the same. The Vietnam Ricebowl Startup Award was brought to come live by Innovatube, a technology consulting firm focusing on startups, with investment and community building arms in Vietnam.
In August, six other Vietnamese individuals and startups were named for: “Startup of the Year” (ticketing platform Ticketbox), “Best Newcomer” (restaurant deals app Meete), “Best Disruptor” (personal finance app MoneyLover), “Founder of the Year” (Hung Tran of US-based edutech startup GotIt!), “Startup Journalist of the Year” (Ngoc Nguyen, staff writer at Dealstreetasia.com) and “Best Social Enterprise of the Year” (healthcare information site UDoctor).
Trung will represent Southeast Asia’s developers to compete at the Global Startup Awards 2016 in Malaysia this winter.
We think the proposed amendment in the Penal Code by Vietnamese policymakers, that deems anyone providing online services without registration as a criminal, is the biggest twist in the local community in 2016.
Here’s the timeline for the submission and removal of Article 292 in Vietnam’s revised Penal Code.
June – August 2016: The Ministry of Justice announced some proposed amendments to the Penal Code, including the mentioned regulation that is very much related to tech startups. It encountered a strong protest from the local startup community, as the proposal targeted businesses and people in e-commerce, payment services and gaming, which constitute the majority of the local tech companies. Stakeholders argued that it went against the new government’s call for innovation and support for young companies. While the law independently looks legit as it requires businesses to register for their services; putting in the context of Vietnam, where the process of getting any licenses is lengthy and complicated, it is unfair for startup companies.
August 2016: Despite the reasoning of the startup community in Vietnam, including state agency – the Vietnam Chamber of Commerce and Industry, Internet association VINASA and lawyers, the Ministry of Justice was determined not to remove Article 292, but said to take another look at this regulation.
September – October 2016: The government officially said to remove the article after several months undertaking its commitment to help local startups. While supporters of the proposal alleged that unlicensed online services might cause social insecurity – the thinking that drove them to put forward the change, the government has agreed it is unfair for online businesses.
In an already tough environment for investment like Vietnam, it was wise enough to regain confidence from stakeholders.
Executive and president visits
Two Google executives, Mike Cassidy and Sundar Pichai, as well as presidents of the US and France paid their visits to Vietnam and hosted talks with local startups. We are not rewording what you can totally search and read on Google about these trips in 2016.
Even as the visits were somewhat diplomatic, that was what had not happened before. Personally as a person present at POTUS Barack Obama’s talk with Vietnamese startup people in Ho Chi Minh City in May, the author of this post felt the eagerness of Vietnamese startups to meet such a figure. The startup community were really inspired by the speeches given by these preeminent people, especially the POTUS and Google CEO.
And the talks were not just “flattering speeches”. Obama’s visit, seen as the most influential one by this blog, has then resulted in WeCreate – an incubation hub for women entrepreneurs, and the Maker Movement Promotion Forum, two entrepreneurship support programs which have recently been launched.
500 Startups entering the market
Putting only “500 Startups” in the sub-headline for this post seems to be a bit unfair to other venture capital firms, because apart from the US early stage investor, regional and global VCs are also keen on Vietnam. They have made real funding into Vietnamese startups, and a lot more VCs will potentially do.
But in addition to a limited number of VCs that have had direct presence in the country for already a few years, i.e establishing funds or hiring local based people, 500 Startups’ $10 million Vietnam fund was the most exciting show-up of those in 2016.
Activities of the fund is updated here.
The presence of new angel investor groups in 2016 is showing that Vietnam is really building an ecosystem, as angel networks are an indispensable component of the equation in an infant tech scene like Vietnam.
Local groups like iAngel Accelerator, Angel4us and VIC Impact, to regional syndicate MAIN (Mekong Angel Investors Network) for lower Mekong countries, were introduced this year with the aim to invest in and help early/idea stage startups to commercialize. Vietnam claims to have nearly 2,000 startups, but a rough estimation shows that 90 per cent of the founders failed at some stages due a large part to the lack of funding, according to economic watchdogs.
As most venture capital firms seek a certain level of maturity in startups, which could even be the ability to grow globally, while not being available fulltime to give mentorship, Vietnamese startups are struggling to reach out to these investors.
Thus, more angel investments recently are seen as an improvement in the funding landscape. While giving away some $20,000 to $50,000 to a startup is already somewhat helpful, several angel investors have also participated in million-dollar-count investment rounds.
With the growing number of angel networks as well as successful individual entrepreneurs who look to back younger startups, we believe angel investment will rev up.
Yet, whether there will be success stories following those investments depends on how much the investors commit to support, and the willingness of startups to adopt the mentorship.