Ministry of Planning and Investment Portal

MPI Minister Nguyen Chi Dung speaks at the event. Photo: MPI

Shifting of global capital flows

According to an analysis by Crunchbase News, total global venture capital in the third quarter of 2022 was 81 billion USD, down by 90 billion USD (53%) a year-on-year and 40 billion USD (33%) quarter-on-quarter. In Southeast Asia, the creative startup investment market attracted 3.72 billion USD in the third quarter of 2022, a decrease of 36.4% over the same period last year and 22% compared to the second quarter of 2022.

Although the total investment value decreased, the Southeast Asian market is still considered to be potential because of some key factors such as: the growth rate of the region is expected to remain at 4-5% per year; a large market size with 680 million people; extensive internet coverage, and the total value of goods is estimated to reach 200 billion USD by 2022, 3 years earlier than previous predictions. Southeast Asia continues to see growth in the number of Internet users with 20 million new users by 2022, bringing the total number of Internet users to 460 million.

Vietnam’s innovation and startup ecosystem is becoming more attractive

In his opening remarks, Minister of Planning and Investment Nguyen Chi Dung said the Vietnam Venture Summit is an annual conference to connect Vietnam’s startup ecosystem with international investment funds. In the previous forums, investment funds committed to invest in Vietnamese innovative startups with increasing committed capital, from 425 million USD in 2019 to 815 million USD in 2020.

In the 2020-2022 period, the investment capital in innovative startups reached nearly 2 billion USD, showing that innovative startup activities in Vietnam are becoming more attractive to international and regional investors.

In the first eleven months of 2022, the realised capital of foreign direct investment projects in Vietnam is estimated at nearly 20 billion USD, an increase of 15.1% year-on-year and is the highest growth rate in the last five years. The number of enterprises entering the market (from January to November) increased by 33.2% over the same period in 2021, of which are 137.8 thousand newly registered enterprises.

According to Minister Dung, Vietnam attracted nearly 500 million USD in the technological field in the first nine months of 2022. The number of investment deals in the later funding rounds is higher than the same period in 2021, showing that Vietnamese startups are gradually growing and attracting larger capital over the years. These are good signals for the innovative startup ecosystem in Vietnam.

Vietnam has so far had 20 private innovative start-up investment funds established under Decree No. 38/2019/ND-CP in 2019 of the Government, with a total charter capital of more than 100 billion VND.

The minister highlighted, investment funds and innovative businesses will be important partners of the Government, ministries and sectors to support and contribute ideas for making investment startup-related policies, contributing to making Vietnam’s business environment more attractive in the region and the world at large.

The MPI will be responsible for studying and reporting on the possibility of developing a law on venture investment, and proposing a mechanism to establish a support fund to effectively support potential innovative start-up projects, he said.

Minister Dung suggested investment funds, enterprises, and startups accompany the ministry in the work, aiming to sketch out effective support mechanisms and mobilise resources for innovation activities in the country.

CEO of Golden Gate Ventures Vinnie Lauria. Photo: MPI

Vietnam - A bright spot in attracting global investment

Vinnie Lauria, founder and managing partner of Golden Gate Ventures, said in the first decade of the startup ecosystem in Southeast Asia, Singapore and Indonesia were the leading growth drivers, with Singapore holding financial and human resources and Indonesia having a giant domestic market.

In 2022, Vietnam has become the third pillar of this golden triangle, bringing a perfect combination of leading tech talent, an entrepreneurial culture of Vietnam and a fast-growing domestic market. “When you put all these elements together, it’s not hard to see why more global investors are betting big on Southeast Asia”, said Vinnie.

According to the World Economic Outlook 2022 from the International Monetary Fund (IMF), the emergence and development of Asia is predicted to see the highest GDP growth of 4.9% in 2023 in several key global regions, including Europe, America, Latin America and the Middle East.

Regional openness to trade, increasing educational attainment, raising skilled workforce, young population, and high mobility combined with regional supply chains have transformed Southeast Asia into an attractive manufacturing hub in sectors as diverse as electronics, automotive, pharmaceuticals and textiles, and a hotbed for digital innovation.

In addition, Southeast Asia has entered into many trade agreements and offered great opportunities to reach Asia, Europe and North America. The Regional Comprehensive Economic Partnership (RCEP) entering into force, together with the recently signed ASEAN investment facilitation mechanisms and policies, are expected to help promote FDI in the region to be more stable in the medium and long term.

One of the reasons that Southeast Asia continues to have long-term potential is its unique mix of markets. In particular, the “Golden Triangle of Startups” Vietnam-Singapore-Indonesia is emerging and becomes a strong growth engine in the coming time. The “Southeast Asian Startup Golden Triangle” report by Golden Gate Ventures notes that the “symbiosis” of Singapore, Indonesia, and Vietnam markets will open up the next growth opportunity for Southeast Asia.

Vietnam is currently rated as Southeast Asia’s latest gem and the small country’s rise is the result of the market’s attractiveness to investors, as well as support from the government for the startup ecosystem.

Investment for creative startups to reach 5 billion USD in 2023-2025. Photo: MPI

Investment for creative startups to reach 5 billion USD in 2023-2025

There were a number of seminars and panel discussions with experts and influential speakers bringing information on the shift of capital flows for innovative startups worldwide and in Southeast Asia. Vietnam is emerging as an attractive destination for innovative startup investment funds globally, with startup investment value in 2020 and 2021 reaching nearly 2 billion USD, exceeding the amount of committed capital by investment funds at the 2020 forum.

In the Vietnam Venture Summit 2022, 39 investment funds committed to invest 1.5 billion USD for creative startups in Vietnam in 2023-2025, lifting the total investment for the field in the period to 5 billion USD./.