[THE INVESTOR] After successfully launching 500 Kimchi fund in Korea, Silicon Valley-based venture capital firm 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 the success story for at least five of the best 10 startups that emerge during this time.”
Eddie Thai, a venture partner at 500 Startups, speaks at the Vietnam Summit 2016, organized by The Economist. The Economist
In March, Thai and a 500 Startups partner, Binh Tran, kicked off the US$ 10 million fund that focuses on Vietnam. The 500 Startups Vietnam is the latest move in Asia by the US-based venture capital company, which has introduced funds in the region over the past year, including Japan, Korea and Thailand. He aims to complete fundraising in the next two months.
The entrepreneur duo plan to invest in 100-150 promising tech startups that have “any Vietnam connection.”
Thai said the fund is investing in software-related opportunities, as this would make it cheap to launch and also easier to scale internationally, reaching out to more users.
When making investment decisions, traction is 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, an O2O furniture e-commerce startup.
“Vietnam is one of those rare spots in the world where economic 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.
Due to its young and tech-savvy population, along with generous tax incentives, Vietnam has become a magnet for global tech firms such as Samsung Electronics, LG Electronics, and most recently Apple, as they seek to tap on 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 validates that there is an opportunity here. “They represent both potential customers and potential 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. “(But) there is still not enough financing here yet.”
Infrastructure, including 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 these things at all. But now I think they realize how important the tech startups are strategically in the long-run. It will help the economy grow, create jobs and generate tax revenue. So they are evolving their policies to 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.
Also, 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.
To the Vietnamese-American Thai, the country is more than a mere investment opportunity.
“It’s a country of my parent’s homeland,” he said. Thai grew up, studied at Harvard and Yale University 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 of here,” he added.
That is why he is so serious about helping the 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 for the emerging markets,” he said.
By Ahn Sung-mi (email@example.com)