According to the latest data from the Department of Market and Enterprise Development under the Ministry of Science and Technology, Vietnam has over 3,800 startups, including 11 valued at more than $100 million each, like Tiki and Topica Edtech.

There are three unicorns (companies valued at over $1 billion), namely VNG, VNLife, and MoMo. About 208 venture capital (VC) funds are operating and investing in startups in Vietnam, including 40 local VC funds. Vietnam ranks third in Southeast Asia in terms of deal count for startups, trailing Indonesia and Singapore.

Vietnamese unicorns are feeling the impact of the funding winter, mass lay-offs, and global economic turbulence.

According to its 2023 financial statement, VNG reported a net loss of VND756 billion ($29.7 million) last year, including a loss of $21.3 million for the parent company’s shareholders. VNG has suffered losses for three consecutive years. Although these losses are significantly narrow compared to 2022, VNG fails to achieve its goal of lowering the net loss to $14.8 million.

At the beginning of 2024, VNG has withdrawn its filing for a US initial public offering. The company has decided not to conduct an offering at this time and intends to file a new registration statement in the near future.

“I want VNG to list in a strong position with a good chance of price appreciation post-IPO. Despite a challenging macro environment in 2023, all of our businesses are progressing well, and we are seeing major opportunities in our global efforts and AI. I have a strong conviction that we will be able to head back to the market in the very near future,” said Le Hong Minh, VNG's CEO.

Meanwhile, MoMo has crossed $2 billion in valuation after raising about $200 million in its Series E fundraising round in 2021. The e-wallet constantly expands its markets and wins customers. At the same time, MoMo has acquired a slew of startups and securities firms.

Currently, MoMo has more than 31 million users and has become a super app platform with 200 services across a wide range of sectors, including consumer finance, insurance, entertainment, e-commerce, and food and beverage.

Around 71.24 per cent of MoMo’s charter capital is owned by foreign investors. However, there is not so much information about MoMo’s business situation. In 2021, MoMo reported a loss of $34.6 million.

The global unicorns that are present in Vietnam also experience a tough period. XanhSM has ramped up its footprint in Vietnam’s ride-hailing market, quickly scooping up market shares from Grab and Gojek.

Meanwhile, Tiktok Shop is poised to surpass Shopee and Lazada in Vietnam’s e-commerce market. Amid fierce competition, three global unicorns namely Zoomcar, Atome and Beamin have pulled out of the Vietnamese market for many reasons.

“How do startups survive?” CEO Minh raised this question for VNG’s employees.

“Every birthday, we remind ourselves how lucky we are to live for another year. I think success is the ability to survive and remain steadfast in our goals,” he said at the Vietnam Innovation Forum. “To survive, VNG’s first lesson is to seek new technologies to keep up with and exploit them. The second lesson is that startups should formulate simple and actionable goals. The third lesson is that startups are willing to take risks.”

Tran Anh Tung, managing director of VIC Partners, said, “The biggest barrier for Vietnamese startups in 2024 is cash flow. Despite having an experienced and dedicated team with high-quality products, startups still face challenges scaling up their businesses amid a lack of funding capital in the market.”

“Vietnamese startups also face barriers in investor expectation. Foreign investors set high expectations for stock listing deals of leading companies such as VinFast, VNG, Momo, Golden Gate, and VNLife. However, up to now, most of these companies have yet to fulfill investors’ expectations. Most recently, VNG withdrew its filing for a US IPO. Up to now, the Vietnamese market has yet to record any major divestment deals of a technology company being listed on the stock exchange, which also causes concerns of investors," he said.

According to Louis Nguyen, chairman and CEO of Saigon Asset Management, 2024 will be a year full of challenges for startups amidst the bleak outlook of the global economy. Therefore, startups can’t maintain high valuations.

However, this tough period is an opportunity for excellent startups to thrive, whereas weak companies will disappear without the preparation to sail through the storm. Smart investors continue to hunt for good deals amidst the challenging period as they have several areas of leverage, including cash, while startups’ valuations become more reasonable.

“In this period, startups have the chance to restructure their businesses towards flexibility and efficiency. They can also focus on building capability, forming alliances with strategic partners, and stepping up mergers and acquisitions. Despite challenges, startups with exclusive technology and a large customer base remain attractive to investors,” he added.