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Vietnam’s young tech talent pulls foreign funds to booming startup …

‘Flappy Bird’ Kicks Off Booming Foreign Investments in Vietnam’s Startup Scene

The country is becoming a major player in the tech industry, and big financial players are taking notice.

BY REUTERS

Hoang Dinh Nam | Getty Images

Vietnam’s tech startups are emerging as a force to be reckoned with as foreign private equity funds bet the country’s talented young brains will yield more successes like the international hit game Flappy Bird.

Just last month, financial powerhouses Goldman Sachs and Standard Chartered PLC raised their investment in the operator of e-wallet MoMo by $28 million, while Silicon Valley-based venture capitalist 500 Startups announced a $10 million Vietnam-focused fund.

One of 500 Startups’ shoestring investments is in automated marketing service Beeketing, founded by college drop-out Truong Manh Quan, 26, who estimates revenue this year of $2 million predominantly from customers in the United States.

“We thought we’ll invest in something like 10 to 20 companies over a 12-month period,” said 500 Startups partner Eddie Thai. “But it quickly became clear, there’s a lot more good companies to invest in.”

The startup boom is the latest chapter of Vietnam’s growing presence in the global tech industry. In the three years since Hanoi-based .GEARS released Flappy Bird, Vietnam emerged from relative obscurity to become the Southeast Asian production hub of South Korean giant Samsung Electronics Co Ltd.

Meanwhile, global tech firms that have long had factories in Vietnam — such as LG Electronics Inc., Panasonic Corp., and Toshiba Corp. — have also been expanding into research and development.

Part of Vietnam’s appeal is a cheaper workforce than in China, as well as membership of the Trans-Pacific Partnership trade bloc and free trade deals with the European Union, plus incentives aimed at luring investment away from neighbors.

Of particular interest to venture capitalists, however, is Vietnam’s tech-savvy population with a median age of just 30.

“Vietnam has the highest-performing computer science students I’ve ever encountered,” said Neil Fraser, a software engineer at Alphabet Inc’s Google, who visited local schools.

The Organisation for Economic Co-operation and Development ranks Vietnamese 15-year-olds above peers in the U.S., Australia and Britain in science and maths.

“The exercises I watched them solve … would be considered challenging problems for a Google hiring interview,” Fraser said.

Ecommerce

Data covering Vietnamese startups is scarce, but Singapore-based startup community Tech in Asia – itself a startup with investors including Japan’s SoftBank Group Corp – reckons there are about 1,500 in operation. That number, relative to population, represents a higher concentration than the 2,100 in Indonesia, 2,300 in China and 7,500 in India.

Startups in Vietnam, like Indonesia, thrive with little government support beyond legal advice and $10,000 cash under a scheme dubbed Vietnam Silicon Valley. In contrast, China announced a $6.5 billion fund mainly for tech and green energy startups last year, while India pledged $1.5 billion in January.

“I plan to grow this company for five years then sell it,” said Beeketing’s Quan. “Then I may become an angel investor myself.”

Most of Vietnam’s startups are in e-commerce, a sector where sales grew around 35 percent last year to $4 billion, and whose 2.7 percent contribution to overall retail sales indicates ample room for growth.

Supporting e-commerce are tech-related logistics startups such as Giaohangnhanh which helped reduce overall logistics costs in Vietnam to a fifth of gross domestic product last year from a fourth just one year earlier.

Other startups include the operator of food-finder app Lozi that received a combined seven-figure investment from DesignOne Japan Inc and Singapore’s Golden Gate Ventures.

Tran Minh Son, one of four Lozi founders, quit university in Pennsylvania to concentrate on the app.

“It was like cutting my legs off so I’ve no way back,” he said. “My parents complained quite a lot. They said, ‘You’re not my son – move out’.”

Lozi, launched in 2012, now boasts 600,000 registered users and 4 million unique visits each month.

(Reporting by Mai Nguyen; Editing by Martin Petty and Christopher Cushing)



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The Great Business Opportunity in Asia Nobody is Talking About

As an industry that lacks formal ecosystem, waste management is a space that is awaiting innovations

BY ABHAY DESHPANDE

Opinions expressed by Entrepreneur contributors are their own.

You’re reading Entrepreneur Asia Pacific, an international franchise of Entrepreneur Media.

Asia is marching forward as the torchbearer for developing economies. China and India are leading up from the front and countries like Indonesia, the Philippines, and Thailand are fast catching up, attracting FDIs and witnessing higher GDP growth rates than the global average. The development which, at a macro level, is indicated by rapid urbanization, increased consumption, growing population is also posing new challenges to the Asian countries to manage and tackle the gargantuan scale of managing the wastes generated by its cities.

Asia, home to five of the 10 fastest growing economies in the world, is also now a home to eight out of 10 rivers, including Indus, Yellow, Brahmaputra, Ganges, Pearl, Amur and Mekong, which cause 90 per cent of oceanic plastic pollution.

Asia is predictably the biggest waste generator. As per the World Bank Report in 2018, South Asia and Asia Pacific together generate a staggering 802 million tons of waste annually. This is 37 per cent of the total global waste generation of 2.01 billion tons. If we include Central Asia and Middle East, the figure rises to 50 per cent of the total waste generation, making Asia the world’s biggest waste generating continent. By 2050, South Asia, Asia pacific countries together will generate 1.5 billion tons of waste.

The big challenge that lies ahead both for the world and Asia is the staggering volume of plastic waste being generated by the Asian countries.

The Challenge Ahead

China, the Philippines, Indonesia, Thailand, Vietnam contribute to half of the world’s total mismanaged plastic wastes. China, the biggest producer of plastic waste, is taking major efforts to curb it. The recent ban of plastic waste imports to China took the world by shock; it is not so easy to impose ban and put an end to the plastic recycling industry worth US$ 3.7 billion but the Chinese government described it as “symbolic measure for the creation of an ecological civilization in China”.

On the other side, India is on its path to become one of world’s largest plastic waste generator. India, which currently generates 9.25 million tons of plastic waste, is expected to generate 31.2 million tons by 2031, an alarming 5x increase fuelled by growing consumerism and penetration of FMCG, ecommerce companies into Tier II, Tier III cities. Although India’s plastic consumption per capita is lower than the global average, it shows the tremendous scope of improvement and higher levels of plastic waste generation in the near future.

Lack of Importance to Waste Management Practices

Last year, we have witnessed beaches like Boracay (the Philippines) and Maya Bay (Thailand) shutting on account of pollution caused by millions of sprawling tourists, wastes discharged by the beachfront hotels. These two tourist spots generate more than US$1 billion in annual revenue for the respective governments and provide employment to 36,000 people. While these shutdowns will be first of many to follow, imagine the economic impact it will cause if more governments follow these inevitable measures to protect environment. Clean up activities offer only a short-term solution and pose major cost challenges to the governments, especially in middle income countries like Indonesia, Philippines, Malaysia and Thailand.

Instead government and policymakers should think of long-term measures like waste management that incentivizes or enforces the waste generators to manage their wastes more responsibly.

Lack of Incentivization

Successful waste management practices across the globe are built around incentivization’s. Malang, a city in Indonesia, generates 55,000 tons of wastes every day and recycles them to finance the health insurance for its residents. This is indeed a win-win situation for the people, government, recyclers. In India, it is common for people, businesses to trade the wastes for cash or physical products but to make things happen on a bigger scale, government has to draft innovative policies that reward citizens for responsibly disposing off their wastes.

Lack of Financial Resources

Waste management is an expensive service. It requires building appropriate infrastructure and scalable operations for effective implementation. Waste management is often administered by local authorities with limited resources both human capital and finances. This keeps the operational constraint for managing waste collection at scale. This is typically a problem in Asian countries where the cities are densely populated. 

Lack of Actionable Data

Data is critical for policymaking and planning. Government bodies and municipalities need to know how much waste is generated, types of waste generated, volumes generated, and the location of generation. For example, geospatial data with respect to waste management can be used to design systems, plan fleet, operations, setting collection targets, measuring diversion rates and ultimately track progress of the overall waste management process. With actionable and accurate data, governments can adopt a more pragmatic approach in allocating budgets, opting right technologies, and involving strategic partners, be it from government, private, nonprofit organizations, to create maximum impact in the process.

The Future of Waste Management 

As an industry that lacks formal ecosystem, waste management is a space that is awaiting innovations. There is an imminent need for VC money, private investments to flow in and encourage innovative ideas to establish integrated waste management system. Accenture estimates there will be a US$ 4.5 trillion global opportunity by 2030 in waste management space waiting for disruptive technologies and innovative solutions to grab a pie of it.

The primary agenda is to bridge the information gap between the waste generators, waste pickers, waste processors and tackle the demand and supply mismatch. Secondly, digital solutions that bring in transparency, traceability, and accountability to all the stakeholders are the need of the hour. These solutions not only streamline the operations but also provide valuable insights of waste generation and the effect to which it is managed efficiently, thus bringing in data-centric approach and measurability to the industry.


Abhay Deshpande

Director, Recykal