Last updated November 1st, 2018.

 

Startups in Vietnam have access to all the conditions required to hatch multi-million dollar tech firms.

Recently attracting large amounts of foreign investment from regional players, Vietnam’s startup scene deserves far more attention from global investors than it gets.

You could even argue that Vietnam’s startup ecosystem is Southeast Asia’s best in terms of opportunities and lack of entry barriers.

 

The Best Frontier Market for Tech?

Vietnam has long been home to manufacturing plants from the world’s top innovators. These include LG Electronics, Panasonic, and Toshiba

In recent years, the country also transformed into Southeast Asia’s production hub for Korean electronics giant Samsung.

Following integration into the ASEAN Economic Community and an increased presence of global tech companies, more investors want to put their money into startups in Vietnam.

In 2016, Goldman Sachs and Standard Chartered Bank together raised US$28 million for a local e-payment operator. Their investment brought over two million additional customers along with incredible transaction growth exceeding 30%.

Meanwhile, California-based venture capitalist 500 Startups also announced the creation of a US$10 million fund focused on startups in Vietnam.

Such large investors are betting on another goldmine. They’ll probably strike gold too considering most of the country’s startups are in e-commerce.

Vietnam’s e-commerce sector, despite getting absolutely no federal support, grew by an astounding 35% last year to US$4 billion.

 

Startups in Vietnam to Grow

You may still be confused as to how Vietnam came this far in terms of technology. InvestAsian finds there are several factors contributing to the advances the country made over its neighbors.

First of all, Vietnam is part of many new trade agreements such as the Trans Pacific Partnership (TPP). It’s going forward despite the United States’ withdrawal and gives Vietnam a competitive edge over neighbors like Laos and Cambodia.

Second, the country has some of the highest-performing computer scientists in the world.

A software engineer from Google mentioned that Vietnam has the highest-performing computer science students, with many of them acing the company’s interview questions on problem solving.

The Organization for Economic Co-operation and Development gives high ranks to Vietnamese teenagers in terms of math and science.

Third, the country offers a cheaper labor cost than even China. As manufacturing costs rise, more large multinational firms are fleeing to places like Vietnam, the Philippines, and Cambodia.

A surge in manufacturing investment, along with the low costs and minimal regulations that help lure it, are a huge incentive for potential investors.

Fourth, there’s a large market for tech products. Investors note Vietnam’s young, tech-savvy population with a median age of 30. That means the acceptance rate of tech products is much higher than in a lot of other countries.

Last but not least, Vietnam has a great deal of startups in comparison with the population. In fact, concentration-wise, Vietnam has a higher ratio of population to startups than Indonesia, China, and India.

With arguably the fastest growing startup scene in Asia, new businesses in Vietnam will draw an increasing amount of investment over the next decade.

 

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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