Việt Nam’s Start-up Scene Booms, Drawing Significant Domestic and Foreign Investment

Việt Nam's Start-up Scene Booms, Drawing Significant Domestic and Foreign Investment

Hà Nội, The Gulf Observer: The burgeoning wave of innovative start-ups in Việt Nam has reached “dizzying” speeds, captivating the attention of both domestic and international investors. This dynamic growth was highlighted at the seminar titled ‘Investment Policies for Start-ups,’ held on Monday in Hà Nội.

According to the National Agency for Technology Entrepreneurship and Commercialisation Development under the Ministry of Science and Technology (MoST), Việt Nam is home to approximately 3,800 start-ups. Among these, eleven are valued at over US$100 million, and three — Momo, VNG, and VNLife — have crossed the $1 billion valuation mark.

Việt Nam is now recognized as a key player in the Southeast Asian start-up ecosystem, alongside Singapore and Indonesia. This status is attributed to its blend of top-tier technology talent and a robust culture of innovation, making it highly attractive to global investors.

A critical determinant of start-up success is the ability to secure capital. Decree No. 38/2018/NĐ-CP, enacted in 2019, provided detailed regulations on investments in small and medium-sized innovative start-ups. This legislation spurred the creation and growth of investment funds tailored to these ventures.

Current data from BambuUP reveals the presence of about 210 venture capital funds actively investing in Vietnamese start-ups. Of these, nearly 40 domestic funds, established under Decree 38, have a total charter capital exceeding VNĐ100 billion (approximately $4.1 million). Additionally, the number of angel investors, though still limited, is gradually rising.

The Việt Nam Innovation and Tech Investment Report by the National Innovation Center (NIC) noted that venture capital investments in Vietnamese start-ups reached $1.4 billion in 2021. Notably, about 90% of this capital originated from foreign venture capital funds, as reported by ThinkZone.

However, to attract foreign investment, Vietnamese start-ups often need to restructure according to investors’ requirements. This usually involves establishing a parent company abroad, typically in Singapore, which then channels investments back into Việt Nam. This restructuring process, common in emerging markets like Indonesia, Malaysia, the Philippines, and China, was detailed in a report by the Scheme 844 office.

Despite the vibrant start-up ecosystem, venture capital activities in Việt Nam have recently slowed, reflecting the global economic downturn. The total value of venture capital deals decreased by 13% in the first nine months of last year, totaling $427 million. The number of deals also fell by 40%, the lowest since 2018, with a notable 50% drop in deals under $500,000, indicating heightened caution among investors.

Nevertheless, transactions valued between $10 million and $50 million have remained relatively stable, highlighting the presence of mature tech companies within Việt Nam’s start-up landscape.

A report by Bain & Company, cited by the Scheme 844 office, indicated that Việt Nam leads Southeast Asia in attracting long-term investors. The survey projected an 83% increase in investment activities in Việt Nam from 2025 to 2030 compared to current levels.

To capitalize on these opportunities, it is crucial to develop innovative start-up investment fund models and create a transparent and safe investment environment. Such measures will enhance Vietnamese start-ups’ access to both domestic and foreign capital, while also providing investors with clarity and confidence in their ventures.