After 89 days without community transmission of the coronavirus, in late November, Vietnam had 3 local infections. The government responded swiftly, including contact tracing, limited lockdown in Ho Chi Minh City, and temporary closure of commercial international flights. As such, the reappearance of COVID-19 is currently contained. The country has recorded just 1,366 COVID-19 cases with 35 deaths to date.
Vietnam is well-positioned for a strong economic recovery. Exports climbed 8.8% y/y in November. Vietnam inked the world’s biggest trade deal, the Regional Comprehensive Economic Partnership (RCEP), with 14 other Asia Pacific nations including China, Japan, South Korea, and Australia. The IMF revised upward its forecast for Vietnam’s 2020 GDP growth by 0.8% to 2.4%, which would be “among the highest in the world.” Multinationals have rushed to relocate production from China to Vietnam to avoid supply chain disruptions. Despite headwinds from the pandemic, Vietnam’s Internet economy grew 16% to reach $14 billion in gross merchandise value (GMV) (Google/Temasek/Bain est. for 2020), while Indonesia’s increased by 11% and Singapore’s contracted by 24%.
Here are some highlights from our eventful November:
- On November 20, we hosted our latest startup Demo Day to showcase 9 rising stars in our portfolio. Hundreds of investors, entrepreneurs, and corporate leaders joined us in Ho Chi Minh City and via the live stream. Scroll down to learn more!
- We had a busy week in Hanoi in late November, where we joined forces with other VCs in forming Vietnam Venture Capital Alliance and in pledging $815 million in investment for Vietnamese startups through 2025.
- Speaking at the “Connecting Vietnam and Silicon Valley” panel as part of Techfest 2020, Binh spoke about how investing with a Vietnamese lens is powerful. He shared that some of our best investments have been looking at problem spaces that are typically ignored by Silicon Valley investors such as how much of the world wants to be able to speak English properly or how important it is for international students to access the US educational system.
- Eddie mentored Southeast Asian female founders via the 3rd Edition of Female Founders Mentoring Hours by Cocoon Capital. The initiative offered 116 female founders the opportunity to be mentored by 50 investors from 34 of the top VCs in Southeast Asia.
- Meanwhile, our investment associates Thao Nguyen and Le Nguyen joined the judging panels of Techfest’s National Startup Competition and InnoLab Asia x Invention Lab’s RisingX Demo Day.
- We closed an investment in edtech. One of our portfolio companies reported closing a substantial Series B raise (to be announced).
Until next month,
Binh & Eddie
500 Startups Vietnam in the News
500 Startups Vietnam hosted on November 20 its latest startup Demo Day to showcase rising stars in its portfolio (Tech In Asia, Vietnam Investment Review). 130 investors, entrepreneurs, and corporate leaders convened at the event in Ho Chi Minh City, while hundreds of others tuned in on the live stream.
Most of the 9 presenting startups graduated from the three-month Saola Accelerator program, where 500 Startups Vietnam invested up to $150,000 in each participating company. Collectively, these startups are doing business in 17 markets across Asia Pacific, Europe, and North America. Launched in 2019, the Saola Accelerator has hosted 3 batches with a total of 17 startups including a mix of fintech, edtech, and e-commerce businesses.
500 Startups and 32 other investment funds pledged $815 million for Vietnamese startups through 2025. The pledges were part of the Vietnam Venture Summit. Last year’s event gathered 18 investment funds who pledged investments worth $425 million. As at the beginning of 2020, over $220 million or 50% of the total amount pledged had already been disbursed.
In a separate development, 17 local and international VC firms including 500 Startups joined forces to form Vietnam Venture Capital Alliance (VVCA). The alliance aims to foster investment opportunities and provide support to foreign investors in Vietnam.
Other select portfolio updates
Cricket One, which specializes in cricket-based protein powders and oils, raised a funding round from Singapore-based Corecam Partners. As Cricket One is building a roadmap for cricket protein to reach a wider audience, the company plans to use the new funding to roll out a new cricket-based burger patty in markets including Japan and the US.
Productfy raised $2.35 million led by Point72 Ventures, Crunchbase reported November 25. The company will use the new funding to continue building out its platform that enables non-bank companies to easily develop and launch their own fintech applications.
Bunch was selected as one of the 50 most promising private tech startups by The Information in its inaugural TI50 list. Featured in the Media category, Bunch is among the companies which “have the potential to be the most valuable businesses in their categories based on their current revenue, business model, and growth prospects.”
Papaya shared with Tech In Asia on how the company looks to digitize Vietnam’s opaque insurance industry. Later in November, Papaya was named one of the five winners of Grab Ventures’ Ignite Batch 1. The winners will have opportunities to leverage Grab’s market access, technology capabilities, and expertise in Vietnam to expand their products and services.
ApplyBoard was named one of Canada’s fastest-growing tech companies for the second year in a row.
Vietnam in the News
Vietnam inked world’s biggest trade deal | Fifteen Asia Pacific nations, which includes China, Japan, South Korea, Australia, New Zealand, and the 10 members of the Association of Southeast Asian Nations, signed Regional Comprehensive Economic Partnership (RCEP) on November 15 after almost a decade in the making. The trade pact encompassing nearly a third of the world’s population and gross domestic product is expected to bolster pandemic-weakened economies by reducing tariffs, strengthening supply chains with common rules of origin, and codifying new e-commerce rules. While many of the members have existing trade agreements, RCEP combines the existing deals and brings Asia a step closer to being a coherent trading zone like the EU or North America.
Vietnam’s GDP expected to grow 2.4% this year | As Asia is leading the world in COVID-19 economic recovery, Vietnam is shaping up as Southeast Asia’s single economic success story this year. The International Monetary Fund (IMF) in November revised back upward its forecast for Vietnam’s 2020 GDP growth by 0.8% to 2.4%, which would be “among the highest in the world.” The IMF also expects only four of the world’s 50 biggest economies to achieve an increase in per-capita GDP in 2020, with Vietnam joining China, Taiwan, and Egypt.
Vietnam has kept its economy expanding amid the pandemic with exports climbing 8.8% y/y in November. In the 11 month period to November, exports increased 5.3% to reach $255 billion, boosting the country’s trade surplus to a record high of $20 billion.
First female central bank chief appointed | Over the past few years, Vietnamese women have increasingly taken key posts both at government agencies and companies. The legislature on November 12 ratified an appointment of Nguyen Thi Hong, 52, as the new governor of the State Bank of Vietnam, making her the first woman to hold the central bank’s top seat. Taking office amid the pandemic, Hong will have to keep bank NPLs under control and handle an ongoing investigation by the US into Vietnam’s currency policy. On the other hand, foreign exchange reserves are at a record high, giving the central bank room to adjust its monetary policies to steer the economy through the pandemic.
Equity market luring flows… The VN-Index rose 0.6% to 1,005.97 points on November 26, the first time it crossed the 1,000-point threshold since November last year. Buying pressure on the market’s blue chips in the final hour of trading helped the index post its eight consecutive gaining session. According to KB Securities, the rally was in line with Asian market rallies supported by the Fed’s November meeting minutes, which signaled a continued dovish policy. Vietnam’s equity market has seen a new wave of individual local investors this year, who account for more than 70% of the daily trading value. The bullish outlook was reflected in the MSCI Vietnam index — up 55% from a March low. High trading commissions and strict foreign investor quotas have not curbed demand.
…and bond market rising appetite. Meanwhile, Vietnam’s fledgling local bond market is picking up steam. Companies priced $14.1 billion of notes this year through October 30 in private placements, a 61% jump from the same period last year. The surge in privately-placed debt issuance and an eye on long-term financial market development prompted the government to tighten regulations on such deals. The move is in favor of public debt offerings, which are generally subject to more rigorous financial disclosures and are more active in more developed markets.
Vietnam Tech in the News
Vietnam’s digital economy managed double-digit growth despite headwinds from the COVID-19 pandemic as per the e-Conomy SEA 2020 report by Google, Temasek, and Bain. Its Internet economy grew 16% to reach $14 billion in gross merchandise value (GMV), while Indonesia’s increased by 11% and Singapore’s contracted by 24%. The report also outlines that investments in Vietnam’s internet sector multiplied by 2.7x y/y to reach $935 million in value across 151 deals last year.
Your next iPad and MacBook may be made in Vietnam. Foxconn Technology Group is moving the manufacturing of some Apple Inc. iPads and MacBooks to Vietnam from China. The company announced a $270 million investment in Vietnam in late November, Nikkei reported. The Taiwan-based company, which just began the production of liquid crystal displays in Vietnam, aims to take advantage of the new Regional Comprehensive Economic Partnership (RCEP) agreement and hopes to bolster its production capacity in the country. As reported in our newsletter last month, rival companies such as Taiwanese electronics manufacturer Pegatron and contract manufacturer Wistron have also decided to expand into Vietnam.
Vietnam / Facebook: a state of stable tension? Vietnam’s government reportedly threatened to shut down Facebook in the country if it failed to censor more local political content, Reuters reported November 19. Vietnam is a major market for the social media company where it earns revenue of nearly $1 billion and accounts for nearly 40% of the local online advertising market. However, the government would undoubtedly face public criticism if they were to ban Facebook outright, as more than 60 million users in Vietnam are relying on Facebook for both e-commerce and personal expression. Given the complex calculus facing both sides, the relationship between Facebook and Vietnam’s government seems likely to remain in a state of stable tension, as The Diplomat called it.
Global digital payments leader Visa signed a partnership agreement with Vietnamese technology company NextTech Group to promote the adoption of digital payments among small business owners in the country. Meanwhile, Vingroup partnered with Techcombank to launch preferential loan services on its B2B2C e-commerce platform Vinshop.
Food ordering startup Lozi, which owns the on-demand delivery service LoShip, raised a bridge round of financing led by Singapore-based Vulpes Investment Management. Lozi had previously closed an eight-digit funding round led by South Korea’s Smilegate Investment.
South Korean unicorn Woowa Brothers, which owns Vietnamese food delivery brand Baemin, plans to shut down the Vietnammm food app to streamline its operations in the country. Baemin acquired the app in May 2019.
In the broader SEA region, superapp rivals Grab (500 Startups portfolio company) and Gojek are reportedly working out a deal to combine their businesses in what would be the biggest internet merger in Southeast Asia.