Covid hits funding for startups

By Vien Thong   May 31, 2021 | 06:28 pm PT
Covid hits funding for startups
The office of a tech startup in Hanoi. Photo by Reuters/Kham.
The total investments in startups fell 48 percent last year to $451 million.

The 2020 Vietnam Innovation and Tech Investment Report by the Vietnam National Innovation Center (NIC) and venture capitalist Do Venture, which revealed this, said the number of deals were down 17 percent to 105.

Vietnam remained in third place in Southeast Asia in terms of number of deals.

Le Hoang Uyen Vy, co-founder and general partner of Do Venture, attributed the fall in the investment to the Covid-19 pandemic and the global economic downturn, which kept investors, especially from Japan, away.

Besides, travel restrictions prevented foreign investors from coming to Vietnam to study startups from close, he said.

Another reason for the drop in investment value is that large-valued deals had already closed in 2019 by later-stage companies. In the event, early-stage deals worth less than $500,000 accounted for over half, up 11 percent.

Payment and retail, fundamental to the Internet economy, attracted the largest investments at $101 million and $83 million. They were followed by HR technology, proptech and fintech.

Local funds or foreign funds with personnel based in Vietnam accounted for over 75 percent of all deals, the reported said.

The number of investors from Japan and Southeast Asian countries plummeted by 63 percent and 64 percent.

Though the Vietnam investment landscape took an inevitable hit from the global crisis, the Government’s increasing efforts to foster the Internet economy and create a conducive business environment to attract foreign investors would stand startups in good stead when investment activities resume, the reported said.

Vu Quoc Huy, director of the NIC, said: "NIC is planning to develop a legal environment for innovation in Vietnam as well as other specific policies and programs to support innovative businesses."

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