Vietnam - next growth driver of SEA Startup Golden Triangle

Vietnam along with Singapore and Indonesia will create the “Startups Golden Triangle” in Southeast Asia, according to local delegates at a conference hosted by the Vietnam National Innovation Center (NIC) and Golden Gate Venture on May 30.

Delegates attend the event. Photo: NIC

In 2021 - the Covid-19-year, Vietnamese startups received a total of US$1.4 billion in investment capital from domestic and foreign funds, 1.6 times higher than the figure of $874 million recorded in 2019. In the first four months of 2022, the number of newly-established businesses increased by 12.3% over the same period and 31.9% compared to the two years prior to 2021.

Speaking at the conference, Vu Quoc Huy, Director of the Vietnam National Innovation Center (NIC) under the Ministry of Planning and Investment said the figure along with the positive growth of foreign investment showed the recognition of the country’s potential in the startup ecosystem and the community. “We expect these investments to double in the next three years,” he emphasized. 

Local experts attending the event said Vietnam is expected to become an important driver of Asia's consumer market over the next decade as an additional 36 million people would join the consumer class. The growth rate of domestic consumption can be up to 20% per year.

In addition, the country, with the largest ratio of middle-class size to total population in Southeast Asia, is estimated at about 40%, four times higher than in 2000. By 2030, the number is expected to increase by 75%.

A young and highly educated workforce is also an appeal to the Vietnamese market. Currently, about 70% of the population of 98 million people is under the age of 35. 

Another factor contributing to Vietnam's potential is a strong surge in digital demand after the pandemic. From the start of the pandemic to the first half of 2021, the market added eight million new digital users, 55% of them are from the non-metropolitan area.

A recent report by Google, Temasek, and Bain&Company predicted that, by 2025, the country’s internet economy will likely reach $57 billion in value with a compound annual growth rate of 29%.

New business models flourish

According to local experts, healthtech, fintech, and supply chain analysis would continue to be the leading areas in the "Startups Golden Triangle". Especially, the development of video games and the D2C (direct to customer) business model would also witness a strong breakthrough.

Vietnam, Indonesia, and Singapore are the top three video game markets in Southeast Asia which is expected to achieve a compound annual growth rate of 8.5% between 2022-2027. In 2020, the revenue of the video game sector reached nearly $530 million, doubling that of 2015.

“Southeast Asia has always been a region with great potential, but expanding the business model is a big challenge for the startups due to the uniqueness of each market,” said Vinnie Lauria, Co-Founder of Golden Gate Venture. “Our research on the region's largest unicorns showed that the unique combination of Singapore, Indonesia and Vietnam’s strengths can help innovate and accelerate growth.”

Huynh Huu Trung, Founder of Mio, a social commerce platform for groceries and fresh produce, recently raised a Series A round of funding, suggested: “Founders in Vietnam need to understand what business models work well in these markets to create the best products and scale regionally.”