Launched in 2018, VinaCapital Ventures is a USD 100 million Vietnam-focused venture capital platform that invests in tech startups. It’s part of VinaCapital, one of the country’s leading investment management and real estate development firms in Vietnam with USD 3.3 billion in assets under management.
VinaCapital Ventures has invested in high-potential technology startups in Vietnam such as Logivan (logistics), Rever (proptech), Ecomobi (social commerce), and FastGo (ride-hailing). Many of the companies in VinaCapital Ventures’ portfolio went on to raise funds in additional investment rounds from foreign VCs. VinaCapital’s past investment credentials also include VNG, Vietnam’s sole unicorn, as well as youth-focused digital video entertainment network Yeah1.
KrASIA spoke with Khanh Tran, founding partner of VinaCapital Ventures and head of technology investment at VinaCapital Group, about Vietnam’s growing traction among foreign investors and whether the ecosystem can live up to high expectations.
KrASIA (Kr): VinaCapital Ventures has been very active in investing in high-potential technology startups in Vietnam lately. There’s also strong interest from regional VCs as Vietnam is considered by many to be the next growth market in the region. Is there much competition between domestic and foreign VCs in the country?
Khanh Tran (KT): We want to be the local VC firm that knows about the local market and has the capability to bridge the gap between early-stage investments and Series B or C. It’s not just about the money. It’s about the local market know-how in Vietnam that would help the startups to be dominant in the local market before considering expansions to other countries.
At VinaCapital Ventures, we have a very clear strategy about the kind of technology companies that we would like to invest in. We live in Vietnam and we do see lots of pain points in different industries; without technology, there’s no way you can fix it. I don’t think there’s a competition [between local and foreign investment firms] yet, at least not right now. A lot of people are trying to set up their team in Vietnam. However, the regional VCs often don’t want to make early-stage investments by themselves because there are certain risks or local nuances that they don’t understand.
Additionally, the Vietnamese founders today are also much more sophisticated. If you bring in just money, it’s not good enough. There are pitch days when I have to pitch myself and my fund to founders. I’m not too worried about competition from regional VCs because the founders are smart and they would know what they want at certain stages of the company. Maybe at Series B or C, VinaCapital Ventures is not the best lead investor anymore if they want to go to Indonesia, Singapore, or even consider expanding to Europe.
Kr: What kind of founders in Vietnam are you looking for? What is the added value that VinaCapital Ventures brings to founders besides funding?
KT: We want to look for serial entrepreneurs, meaning the experienced kind of founders. The second group that we look for is Vietnamese who are returning from abroad—who had a good education overseas, worked overseas, or founded their startups overseas. Many of them are coming back to Vietnam with not just the technology solutions, but also to level up the skill set for the local workforce.
We don’t just write checks. Most of the founders in Vietnam have amazing ideas, but what they normally lack is the capability to position their products within an industry’s value chain. We want to help the founders figure out whether their solution can play a critical role in that whole value chain. How many layers of middlemen would their products help to replace? How much value will be created for the supply side and the demand side? How much cost will be saved?
Founders in Vietnam really focus on the products, which is a good thing. What we at VinaCapital Ventures can do is help them with the go-to-market strategy, good positioning, and tell the stories in languages that the Series B and C investors would understand.
Kr: Vietnam’s tech ecosystem is getting lots of attention now, not just from foreign VCs, but also within the government and private sector. Do you think that such expectations are valid given there have been some doubts about the business models of many “inflated” technology companies these days?
KT: As I mentioned earlier, there are problems in Vietnam that, without technology, you just can’t fix them. For example, in logistics, there are millions of trucks registered in the government database in Vietnam. And 95% of these trucks’ owners have fewer than five trucks. There’s no way that these owners have any information about supply and demand, about who’s going to use their services. After a delivery, 70% of the trucks would return empty. Vietnam’s logistics costs is also among the highest globally. We invested in Logivan, a platform that connects the supply and demand, ensuring more efficiencies for truckers.
Yes, the ecosystem is getting lots of support, not just on the money side but also from the government, which is unprecedented. Our prime minister has come up with lots of ideas about how to push the ecosystem forward, how to help new business models. Of course, there’s always more to do.
Kr: Do you think that Vietnam needs to quickly address the lack of regulations in certain sectors that are important to the digital economy, such as fintech, understanding that there will be a sandbox mechanism soon?
KT: I was in fact surprised at how open the State Bank was when it comes to working with fintech players and investors. This year, we were the investor partner for the State Bank’s Fintech Challenge. The State Bank is very open about learning experiences from other countries. They want to bring all stakeholders to the table when it comes to mapping out effective fintech regulations. It will just take time for things to change.
Kr: What can we expect from VinaCapital Ventures this year and early next year?
KT: We will continue looking for more amazing founders, the kind of founders who want to solve pressing problems in big industries. We don’t do things like Uber for massage, Uber for “some kind of entertainment services.” It’s really up to the founders whether they can bring us solutions in logistics, healthcare, or education. For us, it’s really founder-driven.
VinaCapital has more than 60 portfolio companies across the different funds that we manage. My colleagues at the other funds within VinaCapital also provide much-needed assessment to validate the solutions that the startups offer, and whether these solutions can work in Vietnam. We do believe that it’s a good time for founders to start new companies in Vietnam and for investors to jump in as well.
The interview has been edited for length and clarity.