Vietnam Startup Ecosystem Maintains Global Outlook for 2022

In Startup Blink’s Global Startup Ecosystem Index 2022, Vietnam has advanced in the Index by 5 places to 54th globally, continuing the positive momentum that started with a climb up the Index in 2022. Vietnam rose from 6th to 5th in Southeast Asia, displacing the Philippines, and is well-positioned to overtake Thailand (4th regionally) next year if this positive momentum continues.

Vietnam jumped 5 spots to rank 54th globally

Startup Blink’s Global Startup Ecosystem Index 2022 is calculated based on the total score of quantity, quality and business environment. This total score is designed not only to classify and rank ecosystems, but also to clearly show the gap between ecosystems. Vietnam’s quantitative score and business environment score are not much different from those of Southeast Asian countries in the rankings and ranked 4th in both categories. However, Vietnam’s quality score is the lowest in the region and is quite far from Singapore and Indonesia. In terms of total points, Vietnam keeps a distance not far from Thailand but relatively far from Malaysia, Indonesia and especially Singapore.

2022 Southeast Asia Startup Ecosystem Index

Source: Startup blink, Global Startup Ecosystem Index 2022

Southeast Asia Startup Ecosystem Index Over The Years

Source: Startup Blink, Global Startup Ecosystem Index 2019-2022

Growing sectors attracting investors include e-commerce, fintech, food technology, enterprise solutions, and information technology services. With Unicorns like MoMo and Sky Mavis, Vietnam is becoming a startup powerhouse in Southeast Asia.

Prominent Vietnamese startups mentioned in the Report include 2 Ky Lan, MoMo – a payment application and e-wallet that allows users to make payments and transfer digital money, and Sky Mavis – a company develops software that produces games and products based on blockchain technology, and Sendo – an e-commerce website that offers clothing, home appliances, cosmetics and tech accessories. All three of these businesses are headquartered in Ho Chi Minh City. 

Two cities in the top 1000

Top Cities for Startups in Vietnam Ranked by StartupBlink

Source: Startup blink, Global Startup Ecosystem Index 2022

Two cities ranked in the top 1000 global startup cities of Vietnam are Ho Chi Minh City and Hanoi which are relatively far. Ranked 1st in Vietnam, Ho Chi Minh City is moving closer to the global top 100, jumping 68 spots to 111th, and showing positive momentum from last year. This rapid growth signals that good things are happening in Ho Chi Minh. On the flip side, Hanoi has decreased 31 spots to 222nd, falling out of global top 200. One of the reasons for TP. Ho Chi Minh City has such spectacular growth with the appearance of two new technology unicorns, MoMo and Sky Mavis.

Ho Chi Minh City is the ideal place to be based for E-Commerce & Retail, Education and Transportation startups. Meanwhile, Hanoi is the ideal location for headquarters for Transport, Education and E-Commerce & Retail startups.

Currently, the majority of investment capital in Vietnamese startups is in the middle and later stages, with an average investment value of $9.5 million per round. Only 4% of capital is poured into early-stage startups, with an average investment value of $1,152 million.

Opportunity and challenge

According to a report by Startup Blink, the Vietnamese ecosystem has massive potential, mostly due to the substantial market size of the Vietnamese economy, making the creation of successful local startups profitable even if they do not expand internationally. A large number of expats and digital nomads in Ho Chi Minh city further contributes to the growth of the local ecosystem. However, to become a true regional and global hub, Vietnam will have to generate innovations that have regional or global impact. 

The Vietnamese government has established a number of funds and initiatives at different levels to support startups and promote entrepreneurship. These include the SpeedUP fund started by Ho Chi Minh City’s Department of Science and Technology, the Startupcity.vn online platform, the Vietnam – Finland Innovation Partnership Program, Saigon Silicon City Center, and the National Technology Innovation Fund (NATIF) under Vietnam’s Ministry of Science and Technology.

To attract foreign investors or companies to Vietnam, the government offers tax incentives. In 2016, Vietnam approved the Initiative for the startup ecosystem in Vietnam until 2025, more commonly known as National Program 844, to further promote the thriving startup ecosystems in the country. Since the beginning of the program, there has been strong growth both in the number of new startups and in their revenue. In 2018, the government approved the Law on Supporting Small and medium sized enterprises to support start-ups through technology transfer, investments, training, and incentives for venture capital funds. 

According to Startup Blink, the main challenges the startup community in Vietnam is facing are a shortage of qualified workers, scarcity of funding, lack of critical mass of scaled startups, and slow regulatory reforms. In addition to existing funds and loans, the government needs to invest more in training and education to build a skilled workforce. Vietnam should also continue with regulatory reforms to build a friendly business environment for investors and developers, and to attract digital businesses to the country. The more Vietnam becomes an open society without Internet restrictions, the easier it will be for its startup ecosystem to thrive. 

In recent years, Vietnam’s startup ecosystem has developed extremely dynamically. Along with the birth of small and medium enterprises, Vietnam’s economy shows extremely stable development. With the desire to provide the necessary data for the startup ecosystem in today’s economic market, BambuUP has compiled the Vietnam Open Innovation Panorama Report 2022. This is the most comprehensive report, specializing in updating information about Open Innovation in 2022 for Vietnamese and global entrepreneurs, startups, large corporations, and investors. If you belong to one of the following groups, subscribe to the report so you don’t miss out on this useful information.

>> Looking forward to Vietnam Open Innovation Landscape Report 2022 and become the pioneers helping businesses achieve breakthroughs at: http://ldp.to/BBUreport2022_listing07