The Center for Strategic and International Studies (CSIS), a US-based think tank, has stated that Vietnam is emerging as a new digital powerhouse in Southeast Asia. According to Justin Nguyen from a venture capital firm, Vietnam has more tech-focused founders who create product-oriented cultures. This has significantly boosted company growth and helped make the country a prominent startup and tech hub. Especially, a young and talented workforce is another advantage of tech startups Vietnam. "The workforce here is formidable, and Vietnam is where regional leaders build their high-performing tech teams," he pointed out.
This guide will show you how to tap into the potential of this emerging market and discover new investment opportunities. You’ll also learn from the best practices of successful entrepreneurs and innovators. Without any further ado, let’s get right to it.
1. Tech startups Vietnam: How the dragon of Asia is building its digital future
1.1. Young and connected market
Vietnam (also called the dragon of Asia) is a young market that reflects its youthful population. Still, it is also growing more mature and gaining more global attention. Its fast-growing middle class is getting more educated and affluent, and they want more consumer tech, goods, entertainment, etc.
Significantly, the locals are connected and tech-savvy, and almost everyone has a smartphone. Unlike Europe, which started with computers in the 90s and 2000s, Vietnam has a mobile-first approach to technology. This creates multiple opportunities for tech entrepreneurs and makes Vietnam an attractive market.
1.2. High-quality work at a lower cost
Vietnam has a well-educated workforce in computer science, engineering, and other tech fields. Hanoi University of Science and Technology has achieved remarkable results in the QS World Ranking by subjects 2022. All five of its subjects have improved their rankings, ranking among the world’s top 300-450. Engineering and Technology, the University’s strongest broad subject area, has reached the rank of 360 in the globe for the first time. With quality education and advanced skills, Vietnamese developers excel in areas like programming languages, complex software architectures, and new digital trends.
Here are some main trends related to technical skills among Vietnamese IT professionals, according to the “Vietnam IT Salary Guide 2023.”
Labor costs here are often lower than in many other countries. This is because of the lower cost of living and favorable exchange rate differences, which allow you to reduce salaries and development costs. Ultimately, you can achieve significant savings while maintaining a high quality of work.
1.3. Effective government support
The government has also played a positive role in supporting tech startups Vietnam by providing incentives for entrepreneurs who started tech-driven ventures. They shape the development of the sector through their strategic plan, five-year roadmaps, and regulations, among others. The government’s strong support gives entrepreneurs a chance to create solutions that address unmet needs or new issues and help the government achieve its goals.
For instance, in 2018, the government had just announced its goal of becoming a cashless nation by 2025. On the one hand, this goal has not been achieved yet. On the other hand, it has boosted the growth and adoption of FinTech and InsurTech-related startups, which make banking, payment, and transactions easier. Now in Vietnam, you can pay for most of your daily expenses and monthly bills with just your bank account (or Momo). This is related to the government’s efforts to reduce cash use and bureaucracy.
1.4. Advanced communication infrastructure
Vietnam has invested heavily in developing its communication infrastructure, including high-speed internet connectivity. This enables remote collaboration and supports technology operations.
The country ranks among the top countries in the Asia-Pacific region for the number of broadband subscribers. According to a report by Ookla, a company that measures internet performance, Vietnam ranked 52nd in the world for mobile internet speed, with an average download speed of 42.67 Mbps and an average upload speed of 18.27 Mbps. This means the country’s modern and reliable communication infrastructure can meet the needs of various technology applications.
2. Tech startups Vietnam: Innovation potential
2.1. A dynamic and emerging economy
Vietnam is one of the most vibrant and fast-growing economies in the Asia-Pacific region. According to annual reports by venture capital firms DO Ventures and Cento Ventures, Vietnam has climbed from the second-lowest to the third-highest position among the six major ASEAN countries in terms of startup dynamism. Besides, this country had the largest growth in the Southeast Asian digital economy in 2022, with a 28% increase from $18 billion in 2021 to $23 billion, and it is expected to grow twice as fast as GDP until 2030 (19% vs. 9%).
2.2. A hotspot for creative startups
Vietnam has witnessed a remarkable development in its creative startup sector, along with its rapid economic progress. There are about 3,800 startups in the country. The General Statistics Office states that Vietnam is one of the most active creative startup ecosystems in Southeast Asia. The share of venture capital investment in startups rose from 5% in 2018 to 17% in 2019, showing this impressive growth.
2.3. A supportive and interactive ecosystem
Vietnam is also building an ecosystem that encourages and facilitates collaboration among different economic actors for collective innovation. Thanks to the Vietnamese government’s efforts to create an innovation-friendly environment, the country ranked 48th out of 132 countries in the Global Innovation Index (GII) 2022 by the World Intellectual Property Organization (WIPO). Among the lower-middle-income group economies, Vietnam ranked 2nd out of 36 countries, becoming the innovation leader in this group. The data showed that Vietnam performed better than the group average in all GII pillars, including creative outputs, human capital and research, market sophistication, business sophistication, knowledge and technology outputs, and infrastructure.
2.4. A regional leader in tech startup investment
A report by the Vietnam National Innovation Center (NIC), a unit of the Ministry of Planning and Investment, and Do Ventures, revealed that tech startups in Vietnam attracted nearly $2 billion in investment in the last two years. This made Vietnam the third largest country in Southeast Asia in terms of the number and value of deals.
3. Case studies of high-growth ventures in Vietnam
3.1. Venture Capitalist invests in Vietnam’s tech workforce and ecosystem
Tan Yinglan, the founder and managing partner of Insignia Ventures Partners, sees the potential of Vietnam’s tech workforce and its role in developing the country’s startup ecosystem. His venture capital firm which focuses on early-stage startups has invested in five tech startups Vietnam in different sectors like education, fintech, logistics, recruitment, and healthcare. Two of these startups, Finhay and Medici Vietnam, were featured in Forbes’ Asia 100 to Watch in 2022.
He stressed that the tech talent market in Vietnam has become more competitive. That’s because more global companies rethink their talent pool distribution and startups keep emerging or growing their operations in the country.
3.2. Antler invests in founders and their visions
Another Singapore-based venture capital firm that focuses on early-stage startups is Antler. The firm bases its investment decisions on the roles, visions, and abilities of the startup founders. The firm has backed 72 startups in sectors like e-commerce, fintech, and logistics, mainly in Vietnam, Singapore, and Indonesia. As of the first quarter of this year, Antler’s portfolio companies have raised a total of US$718 million globally, resulting in a portfolio value of US$3.8 billion.
3.3. Samsung uses open innovation with startups to stay ahead
Samsung is a leader in using open innovation, which means working with other companies to create new products and technologies. This corporation has its R&D team, but it also collaborates with startups in different ways. Sometimes, it partners with startups to add new features or integrations to its existing products. Other times, Samsung invests in startups to learn from their new technologies.
Also, it runs accelerators, which are programs that help startups grow and develop their products. Some of these products may become part of Samsung’s portfolio later on, or just help Samsung learn new things. Finally, Samsung acquires startups working on innovations that are important for its future strategy.
By working with startups, Samsung can access a variety of innovations that can improve or complement its products. This creates value for both it and the startups and helps Samsung stay competitive in the market.
4. How to succeed as a tech startup in Vietnam
4.1. How product development and tech talent can give you a competitive edge
Many tech startups Vietnam are looking for more investment to expand their businesses and reach new customers. They know that having a good product and a strong tech team is crucial for their success. They work hard to improve their product quality and user experience, as well as to hire and retain the best tech talent available.
Huy Nguyen, COO of Telio, a Vietnam-based business-to-business (B2B) e-commerce startup, said that startups need to do all sorts of frugal innovations all the time, so they are highly dependent on a team of tech human resources. The quality of these resources is critical to the success of the startup, as most startups are either tech-led or tech-enabled.
Another example is Dat Bike, which makes electric motorbikes. Dat Bike has raised money from several investors who recognized the potential of its product and its tech team. While it has a brilliant idea and an excellent product, it also knows that it needs to keep improving and innovating to meet the market needs. That’s why the company has a highly skilled tech team that can work on new features and solutions for its electric motorbikes.
As a result, Dat Bike achieved remarkable growth last year, with revenue increasing tenfold and the number of employees tripling since the launch of the Weaver 200 product in November 2021. Plus, the number of orders exceeded expectations and goals by a factor of three.
4.2. How a strong technology founding team can boost confidence and speed
Another factor that can make or break tech startups Vietnam is having a strong technology founding team. This means having founders who have technical expertise and experience in building and scaling products and technologies. A strong technology founding team can ensure that the business concept or idea can reach the market and end users quicker and that the product can adapt and improve according to feedback and demand.
Thuong Vuong, Group CTO at Chotot, Vietnam’s online classifieds site, believes that with a strong technology founding team, investors will have more confidence in the team’s ability to scale up during the growth phase.
4.3. How JT1 helps you find the best tech talent
To succeed with your tech startups Vietnam, you may need help finding and hiring the best tech talent for your company. That’s where JT1 comes in. As a leading IT recruitment agency solely dedicated to IT and software engineer recruitment, JT1 has an impressive database of qualified software engineers, technical leaders, project managers, CTOs, and other IT professionals who can work on various technologies and platforms. We also boast market insights and research on this industry.
We’ll help you find the right candidates for your company as fast as possible, with flexible pricing packages and guarantee options that suit your budget. Don’t hesitate to reach out to us at any time. We’re eager to hear from you and assist you with your needs.