WHILE 2019 was a blockbuster year for tech deals in Vietnam, funding in the first half of 2020 saw a drop as travel restrictions and uncertainties in global financial markets disrupted deal-making activities.
Despite this, Vietnam remains a hotspot for startup investments. The number of investors entering the country has been on an upward trend since 2014 and the pandemic has thrown up opportunities in education, healthcare and financial services, a report by venture capital firm Do Ventures found.
Last year, Vietnam recorded a 92 per cent rise in tech investment value to US$861 million across 123 deals, more than double the number of deals in 2018. The figures include various events that are considered non-venture capital, such as initial coin offerings, project financing and corporate spin-offs.
Later-stage deals continue to account for an outsized proportion of the total capital invested. There were three deals worth more than US$50 million that totalled US$386 million, and nine deals worth US$10-50 million that totalled US$286 million.
Early-stage investment activities remained strong. There were 98 deals with a value of less than US$5 million, almost double that of the figure a year ago.
As Covid-19 broke out at the start of 2020, investment proceeds in the first half of the year fell by 22 per cent from the same period last year to US$222 million.
The number of early-stage deals with a cheque size of US$500,000 to US$10 million fell sharply from 31 to 14. Late-stage financing was mostly flat at US$183 million as deals with large cheque sizes closed in H1 had started before the Covid-19 global outbreak.
Investments into the retail and payments sectors continued to dominate in terms of deal size, led by landmark deals such as those of VNPay, Sendo and Tiki in 2019.
In H1 2020, retail continued to lead the funding amount with US$64 million. The period also witnessed a growth in funding for emerging industries such as employment, real estate and infrastructure.
Investors from South Korea, Singapore and Japan flocked to the Vietnam market in 2019 and made up the top three foreign investors in the country's tech ecosystem. From the start of 2019 to end-June this year, the top five most active investors in Vietnam, by number of deals, were South Korea's Nextrans and Bon Angels, global venture firm 500 Startups, and Japan's Genesia Ventures and CyberAgent Capital.
According to Do Ventures' June survey of 50 active funds in six major regional markets, Vietnam is the top investment destination in the next 12 months, followed by Indonesia.
The surveyed funds were looking to invest in up to 200 deals and nearly 80 per cent of the investors planned to deploy up to five deals. The focus will be on education, healthcare and financial services.
Cento Ventures, a South-east Asia venture capital firm based in Singapore, was the data partner for the Vietnam tech investments report. It noted that a few large deals would occasionally avoid detection due to their secretive nature.
The firm added that pre-Series A deals data in the region is far from exhaustive due to the sheer volume of deals in the US$10,000 to US$250,000 range happening in the market. That said, the total dollar value of inflow and outflows is unlikely to be impacted heavily.