Given 500’s mission to back entrepreneurs globally, we strive to go where other investors rarely venture.
Several years ago, Vietnam was not an obvious tech investment destination: the country was poor (GDP per capita was barely over $2k USD according to the World Bank), fraught with bureaucracy, and struggling to create an ecosystem for the few, disconnected founders and even fewer active angels and VCs.
But entrepreneurial folks did see elements of something special: a fast-growing economy; a substantial supply of low-cost, high-tech talent; and a broad & experienced Vietnamese diaspora increasingly interested to reconnect with and contribute to the country. A new wave of tech founders decided to take the plunge.
Despite — or because of — the lack of financing and support available to them, serial entrepreneur Binh Tran (co-founder of Klout) and I leapt in too, announcing in March 2016 the planned launch of a Vietnam-focused fund.
“The world is taking notice. A leading global venture capital firm called 500 startups just launched a 10 million dollar fund here in Ho Chi Minh City,” said Obama during his visit in 2016. (Vietnam News)
Thus began the arduous process of raising a frontier market venture capital fund led by first-time fund managers. It was humbling to be sure. Fortunately we were emotionally sustained by the work that we started doing right away.
Investing in and supporting high-potential entrepreneurs
Among 500 Startups Vietnam’s female founders: (from left) Debbie Mullen (Copper Cow Coffee), Vu Van (ELSA), Mimi Chan (Littlefund)
We have invested almost $3M in 36 companies to date, with a focus on companies serving the Vietnam market and/or leveraging Vietnamese talent. The companies have been diverse, ranging from ecommerce and edtech, to fintech and blockchain. Based on our data, their teams have been pretty diverse as well: 25% have at least 1 female founder (it’s a decent start, but we aim to do better); founders were raised in Vietnam, the U.S., France, India, Iran, Turkey, and Australia; their ages range from early 20s to late 40s; and so on.
We are pleased with the portfolio’s progress so far. Among companies in whom we invested more than 1 year ago, 75% have reportedly raised a combined US$60M in downstream capital through the 3rd quarter of 2018. 2 companies have closed money from Sequoia. 1 company has been acquired. In our view, these are just early signals in a long journey for our founders and for us. Though we never doubted that Vietnamese startups could do well, the speed at which companies are hitting these milestones has been pleasantly surprising and encouraging.
Helping develop a thriving ecosystem in Vietnam
From left: Binh at Geeks On A Beach in the Philippines, Eddie at WEF ASEAN 2018, a photo during Obama’s visit to Vietnam in 2016
Along the way, we’ve been helping develop foundations here in Vietnam, partially out of necessity (e.g. for supporting our startups) and partially in pursuit of 500’s mission to build thriving startup ecosystems around the world. The whole team has been involved in educating Vietnamese founders and investors, providing industry feedback to government stakeholders about potential regulatory reform, providing feedback at pitch competitions & demo days, and more.
Additionally, we have worked to draw global attention to Vietnam’s tech potential. 200+ press outlets — with focused articles from Forbes, Fortune, Bloomberg, TechCrunch, DealStreetAsia, and Nikkei Asian Review — have reached out to us to talk venture capital and startups in Vietnam. We have also shared about Vietnam’s opportunities and challenges in 100+ local, regional, and global events organized by organizations including The Economist, the World Economic Forum, AVCJ, Horasis, the Obama Foundation, e27, and Tech In Asia. We have also organized a few of our own curated events, such as “Google Startup Week” in November 2016 and our inaugural “Vietnam Investor Expeditionary Trek” in January 2018.
We believe our conviction has been a factor in the increased activity. According to data and analysis by Topica Founder Institute, startup funding in Vietnam has increased from 29 deals in 2014 to 92 deals in 2017. Several new funds have launched recently to invest in more Vietnam-connected startups, including ESP Capital, VinaCapital Ventures, Startup Viet Partners, and Zone Startups Vietnam, to name a few. With unprecedented interest in the region, we’re ready to step on the gas.
Today, we’re psyched to announce the close of our fund at $14M.1 That’s 40% over our $10M target. Substantial investments come from our friends at GS Shop, Humax, NCORE, and numerous other investors in Asia, the US, and Europe. Though small in the world of investment funds, we believe a little money can go a long way for startup founders. Resourcefulness, cost-efficiency and an undeniable capacity to hustle seem to be coded in their DNA.
The funding will be extra fuel for the 500 Startups Vietnam team to:
- Invest in more startups. Having set our sights on up to 100 deals for this fund, we’re on the outlook for up to 64 more amazing startups to back.
- Write bigger checks. ~2/3 of our initial investments have been $50K-$100K. Going forward, we expect our typical first check to be approximately $100K, and potentially up to $250K.
- Increase team capacity to help our portfolio companies. We already welcomed 4 new colleagues in September. Born and raised in different parts of Vietnam, they bring diverse work experience ranging from startups, like Anduin Transactions and Topica EdTech, to larger companies, like Lazada, Deloitte, and KPMG. We’re aiming to hire 2-4 more people to join the team in the coming months.
We’re inspired by our portfolio company founders’ visions & grit, and we’re grateful to be able to be a part of their journey. We’re ready to roll our sleeves up higher and work even harder to help them build the future.
Until then, stay “pho-nomenal”!
#500strong, Saigon edition
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Disclaimers and notes: This article reflects the personal views of Eddie Thai, and not necessarily the views of 500 Startups. Nothing in this article should be construed as an offer, invitation or solicitation for investment, or be construed as investment advice. Data provided is as reported by portfolio companies, third-party sources, and/or internal estimates and may not have been independently verified. 1: including the GP commitment.