Venture funds funnel capital into startups despite recession

VietNamNet Bridge - Analysts warned months ago that venture capital pumped into technology startups would decrease as a result of the global recession. However, they have been proven wrong.


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The number of technology startups which successfully called for capital from venture funds increased to 67 in 2015, a twofold increase compared with the year before, according to Topica Founder Institute.

A report of the institute shows that the number of startups receiving venture capital in Vietnam increased sharply in the last five years. In 2011, only 10 startups received capital, while the figure rose to 24 in 2012, then 25 in 2013 and 28 in 2014.

Meanwhile, analysts noted that the real number of startups that received venture capital could be even higher, because many investment deals have not been publicized.

The report also pointed out that the fields that most attracted investors were e-commerce, media, fintech (finance on technology basis) and edtech (education on technology basis). 

In 2011, only 10 startups received capital, while the figure rose to 24 in 2012, then 25 in 2013 and 28 in 2014.

Nearly 50 percent of the seed investment capital poured into Vietnamese startups were from foreign investors.

Of the 67 deals reported last year, 25.8 percent were disbursement for startups in their initial operation periods (seed), 37.1 percent in series A, 16.1 percent received angel capital and 6.5 percent in series C.

The investment deals included ones worth $10 million and others like Foody, which received capital from Tiger Global Investment. 

Cod Coc, a search engine described as the Google of Vietnam, received $14 million from Hubert Burda, while Huy Vietnam received $15 million from Templeton.

Pham Minh Tuan, the founder and CEO of Topica Edtech, noted that contrary to the prediction that venture capital into technology startups would decrease amid the economic recession, capital, in fact, has been increasing in recent years.

However, Tuan said fewer than 30 technology startups have succeeded in Vietnam. These include names which have become well known such as VNG, Peacesoft and Vat Gia. Meanwhile, 90 percent of others have died for many reasons.

Tuan said the Vietnamese startup community now has great opportunities to attract capital from venture funds. FPT, the largest Vietnamese information technology group, has set up FPT Ventures, a $3 million seed fund. 

Meanwhile, foreign venture funds, especially ones from the US, Japan and Singapore, are also willing to pour capital to fund Vietnamese startups. 

Vietnam ranks seventh among 44 countries with highest entrepreneurial spirit in a survey conducted by Technische Universitat Munchen (TUM), Gesellschaft fuer Konsumforschung (GfK) and Amway. 

At least 71 percent of respondents in Vietnam have a positive attitude towards business start-ups. Meanwhile, 89 percent of polled people said they wanted to start their own business.


TBKTSG

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