HO CHI MINH CITY: A tech-savvy population, a fast-growing economy, and the perks of being first in an emerging market — Vietnamese entrepreneur Le Thanh saw the potential in booming Ho Chi Minh City for his startup transforming coffee grounds into masks.
The 35-year-old chemistry graduate worked for two multinationals before stepping out on his own three years ago to launch ShoeX — a sustainable footwear company which nimbly pivoted to masks as the coronavirus pandemic struck.
When he entered the workforce, Thanh was drawn to the higher salaries and no-nonsense working culture at foreign companies he assumed were a cut above local firms, tangled up in rules imposed by his country’s staid communist rulers.
“But now I see there are more openings in a place where things are a bit murky,” Thanh told AFP from his buzzing Ho Chi Minh City co-working space. He is not alone in believing Vietnam — and especially its southern commercial center — is poised to become an innovation hub thanks to its young, educated and digitally active population.
Vietnamese e-commerce and e-payment companies have been “flooded” with private equity in the past couple of years, said Eddie Thai, a Ho Chi Minh City-based partner at venture capital firm 500 Startups. Their rise has been stellar.
Vietnam-based startups made up 18 percent — or $741 million — of the capital invested in Southeast Asia in 2019, up from four percent in 2018, according to a report by Cento Ventures.
Although Indonesia remains the leader, the amount pumped into Vietnam startups pushed ahead of Singapore for the first time in 2019, the venture capital firm said.
The gold rush comes in spite of cumbersome regulations for foreigners, Thai told AFP, making it difficult to invest and repatriate capital.
Last year, popular e-wallet platform VNPay reportedly snagged the largest deal in Southeast Asia, attracting $300 million from Softbank’s Vision Fund and Singapore’s sovereign wealth fund GIC.
And although Thai said investment had paused due to the coronavirus pandemic, Vietnam is well-placed to bounce back.
Its economy unexpectedly grew in the second quarter and the International Monetary Fund (IMF) predicts a 2.7 percent expansion for the year despite the global downturn.
The country also has a huge pool of software engineers who cost substantially less than their Indian or Chinese peers.
And unlike the tech talent in wealthy startup hubs such as San Francisco or London, they understand what consumers in the emerging world want, Thai says.