Startups look to build synergy with established names, illustration photo/ Source: freepik.com

Director of the National Innovation Centre (NIC) Vu Quoc Huy believes that leveraging the cutting-edge ideas and nimbleness of startups can be a game-changer for established corporations seeking to innovate.

“Startups possess the agility and innovative thinking to develop unique solutions that can significantly benefit established corporations. By tapping into these fresh perspectives, large companies can unlock new avenues for growth and efficiency,” Huy said at Inno Vietnam-Japan Fast Track Pitch 2023, held last week in Hanoi.

Ishikawa Hiroshi, managing director of the Japan External Trade Organization, and a special advisor to the Japanese Ministry of Economy, Trade, and Industry, observes Vietnam’s growing startup scene with optimism.

“The synergy between innovative startups and legacy corporations can be transformative,” he said.

The event garnered substantial interest from Vietnam’s startups and the international community alike. With themes interwoven with the reality faced by six businesses encountering challenges, the programme is poised to yield outstanding solutions to address existing business issues.

This year, notable Vietnamese participants at the event included VinGroup, MoMo, and FPT Group.

From Japan, Kokyu Group, Money Forward Group, and the Fujikin Danang Research, Development, and Production Centre also represented.

Vingroup aims to leverage circular economy principles to harness the potential of used electric vehicle batteries. Meanwhile, FPT’s goal is to establish a cross-border carbon trading platform, integrated with a virtual assistant for smooth legal coordination across departments.

A FPT representative commented, “We aim for seamless cross-border carbon trading, a step towards global sustainability targets. We’re also inviting startups to join hands in this transformative journey.”

Elsewhere, MoMo focuses on refining the digital payment experience, especially for demographics like the middle-aged, elderly, and rural communities. Their spokesperson said, “We envision a universally accessible digital financial landscape, irrespective of technological aptitude or geography.”

Highlighting the importance of the initiative, Huy of the NIC remarked, “It’s a golden opportunity for Vietnamese startups to showcase their offerings to prospective elite clientele. Exceptional products will receive backing for further development, aiding their global market expansion.”

Meanwhile, Truong Ly Hoang Phi, CEO of IBP Vietnam, pointed out the bright spot Vietnam holds in Asia’s startup scene, even with this year’s challenges.

“Over the past three years, Vietnam has emerged as a shining startup hub in Southeast Asia and Asia at large,” Phi highlighted at last week’s investment conference InnoEx 2023.

“The total investment in Vietnamese startups reached a record high of over $1.4 billion in 2021, but decreased to $634 million in 2022. In terms of deal volume and investment scale in the startup sector for 2022, Vietnam ranked third and fourth respectively in Southeast Asia,” Phi added. “Despite capital crunches and stringent investment parameters, Vietnam’s startups remain an investor magnet, particularly from venture capital entities.”

Recent figures from DealStreetAsia indicate a muted investor enthusiasm in key Asian markets during Q2 compared to last year. However, Vietnam’s startups outpaced Indonesia’s, securing a notable $413 million in funding.

Nguyen Khanh Van, director of Private Equity at Thien Viet Securities JSC (TVS), an early investor of MoMo, stated that technology is not necessarily the decisive factor for the success of a startup. Instead, it is the applicability of that technology in a sufficiently large potential market.

“Solutions that have been validated in other emerging markets in Southeast Asia are good indicators. Can you think and make appropriate adjustments when bringing those models to Vietnam with its unique human and cultural nuances? Does Vietnam’s legal framework and macroeconomic landscape facilitate the long-term development of these solutions? These are questions I consider before deciding to invest,” Van said.

Currently, TVS invests in venture capital ranging from $1-5 million for Series A stage startups and also offers short-term loans based on business requirements.

In addition, impact investing is also expected to gain traction. Angela Tay, a representative from AgFunder, advised impact startups to look beyond Asia, highlighting Europe and the Americas.

“While risky investments and private funding have witnessed substantial declines of 40-50 per cent in recent years, investment in the impact sector has only dipped by 7 per cent,” she noted. “This underscores the resilience of this sector during times of crisis. Impact investors still boast considerable funds to allocate towards genuinely high-quality startups, a niche they are actively seeking within the market.”