Last week, we had the opportunity to partner with BLOCK71, an ecosystem builder and global connector, in a webinar titled “ENTREPRENEUR LINK: FROM SEA TO SAIGON”. The topic is about exploring venture opportunities into Ho Chi Minh City, Vietnam, one of Asia’s most promising and driven startup ecosystems.
During the webinar, Frank Lee, Tech JDI’s Managing Director, highlighted how the country became the offshore and investment spotlight in recent years. Then, he broke down what Tech JDI found in the Vietnam market, and why it is the hotspot for startups to grow. Here are some of the highlights:
Vietnamese’s Positive Outlook On Singapore
Vietnamese generally have good regard for Singapore as a model city for business, education, wealth, sophistication, orderliness, and multicultural encompassment. Also, many Vietnamese identify with the same Confucius social philosophy which Chinese-ethnic Singaporeans embrace.
As such, Singapore companies tend to have a positive image with Vietnamese, and Vietnamese are open to doing business with Singapore companies in Vietnam. In fact, Singapore was Vietnam’s third-largest investor in 2019 with a total investment of US$4.5 billion.
Startup Ecosystem Booming
Vietnam’s GDP has grown approximately 6% each year over the past 10 years, making it one of the fastest-growing economies in the world. They are also home to one of the largest young populations with more than 60% of the inhabitants are under 35 years old.
In comparison with other start-up ecosystems in Southeast Asia, Vietnam has risen in prominence as a result of strong economic growth, young demographics, and relatively better availability of software engineering talent. According to a report, local Vietnamese startups raised a total of USD$246 million just last year. Most of them are in the tech sector and specialized in tackling emerging market sectors such as fintech, e-commerce, transport and logistics, education, and healthcare.
With new technologies like AI and blockchain appearing, we will only see more and more startups appearing in Vietnam.
Affordable Tech Talent
It is widely said that the ideal startup is headquartered in Singapore, but backed with engineers in Vietnam. Vietnam is famous for its young and capable tech workforce thanks to the government’s heavy investment in science, technology, engineering, and math education. As a result, the country is churning out at least 80,000 IT graduates a year to the market.
Of course, the talent pool has its share of challenges, as the ecosystem is still relatively nascent, and the talents are less experienced with global/enterprise-scale software development and technology infrastructure. While the level of spoken/written English is steadily improving, communication is still often a daily issue which most startups try to overcome by having more detailed written communication and more video calls. There is also a scarcity of good technical leadership – experienced tech leaders who can lead large software teams and solve complex technical problems.
Nevertheless, the software engineering foundation is certainly there, and we expect to see the technical labor force growing better over time. Vietnam’s massive talent pool – if properly refined and nurtured – will become a unique comparative advantage over other Southeast Asian countries when it comes to offshoring your project.
The Time Is Now
Vietnam has come a long way since its emergence from the Vietnam War. Their future is now being written by a growing population of students, coders, engineers, entrepreneurs, and innovators, all enthusiastic for a better future.
For startups from mature markets such as Singapore, Vietnam presents a unique window of opportunity to further their tech capability and market expansion. Thus, it is no wonder that Vietnam is widely regarded as the best start-up hubs to venture in 2020.