[INTERVIEW] 500 Startups bets on Vietnam as next startup hub

[INTERVIEW] 500 Startups bets on Vietnam as next startup hub

PUBLISHED : November 18, 2016 - 14:44

UPDATED : November 18, 2016 - 17:41

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[THE INVESTOR] After successfully launching 500 Kimchi fund in Korea, Silicon Valley-based venture capitalist 500 Startups is betting on Vietnam as the next hotbed to nurture rising startups.

“We want to make 100 investments here,” Eddie Thai, a venture partner at 500 Startups told The Investor on Nov. 16 in a Skype interview.

“We believe there are going to be lots of technology startups that will emerge in the next couple of years. We want to be part of that success story for five of the best 10 startups that emerge.”

Eddie Thai, a venture partner at 500 Startups, speaks at the Vietnam Summit 2016, organized by The Economist. The Economist

Thai and another 500 Startups partner Binh Tran kicked off the US$ 10 million fund focused on Vietnam in March this year. The 500 Startups Vietnam is the latest Asian move by the US venture capital, which introduced funds in the region over the past year, including Japan, Korea and Thailand.

The entrepreneur duo plan to invest in 100-150 promising tech startups that have “any Vietnam connection.”

When making investment decisions, Thai said he first focuses on anything software-related. Because it is cheap to launch and also easier to scale internationally, reaching out to more users.

Traction is also critical, among other criteria. “Are there lots of users already using it? How engaged are they? How is the growth rate? We think traction speaks loudly.”

The Vietnam fund has made 10 investments so far since its market entry. They include Elsa, a mobile app that uses AI to help people improve their pronunciation, and Mitssy, a furniture e-commerce. He aims to complete the fundraising in the next two months.

“Vietnam is one of those rare opportunities where the growth seems to be strong and steady,” he said. “On the investment side, we are seeing lot of folks in the region, including Korea, coming to Vietnam for investment opportunities.”

Vietnam’s tech industry is a bright spot in the communist country’s fast-growing economy, home to nearly 90 million people.

Thanks to young and tech-savvy population, added with generous tax incentives, Vietnam has become a magnet for global tech firms such as Samsung Electronics, LG Electronics, as well as, most recently Apple, seeking to deploy the country’s educated, low-cost labor force.

The presence of tech giants in Vietnam is a good signal for startups, Thai said, as it indicates that there is an opportunity here. “They can represent both potential customers and competitors (for startups) as well.”

Despite its vibrant tech scene, Thai says Vietnam is still in the early stages when it comes to startups. “It has been developing a lot in the last couple of years,” he said. “There is still not enough financing here yet.”

Infrastructure -- which includes financing and regulation -- also poses some challenges to the startup scene.

However, the Vietnamese government is becoming more vocally supportive. “Five years ago, the government wasn’t talking about all these things at all. But I think they realize how important the tech startups are strategically in the long-run. It will help the economy grow. They will create jobs and also generate tax revenue. So they are evolving their policies to actually help,” he said. “Part of it is trying to reduce the regulations on startups.”

Thai is very hopeful about the country’s up-and-coming startups, led by hustling, hungry entrepreneurs who often focus on emerging-market problems.

As the economy is still in the developing stage, the opportunity cost to start a new business in Vietnam is not high, he said. “They can afford to take risks. They will go for it,” he said.

For Vietnamese-American Thai, the country is more than a mere investment opportunity. “It’s a country of my parent’s homeland,” he said who grew up, went to schools and worked in the US before moving to Vietnam four years ago. “I saw a lot of young people who didn’t have the same kind of resources and opportunities I had ... .I couldn’t help (but) think what if they were given the same things. I think there will be something really special coming out from here.”

Adding, that’s why he is serious about building a startup ecosystem in the country.

“We want to build the startup ecosystem overall and demonstrate Vietnam can not only be an interesting opportunity, but also a major player in the international technology scene, especially in the emerging markets,” he said.

By Ahn Sung-mi (sahn@heraldcorp.com)


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