Ascend Vietnam Ventures prioritizes FinTech, blockchain, EdTech, Future of Work, Saas as Vietnam’s tech sector enters ‘golden age’ [Q&A]

Ascend Vietnam Ventures (AVV), an early-stage venture capital firm in Ho Chi Minh City, will prioritize several segments, including FinTech, blockchain, EdTech, as the technology sector in the country enters the “golden age”.

“We are sector agnostic. However, AVV gives high priority to Fintech, blockchain, EdTech, Future of Work and Software-as-a-service (SaaS) because we see more investment opportunities there, Binh Tran, co-founder and general partner of Ascend Vietnam Ventures told TechNode Global in an interview. “Startups that can help millions of small and medium-sized businesses (SMBs) use software and data in their businesses and startups that capture a major shift in consumer behavior are our top priorities.”

Vietnam has a nascent ecosystem, most venture capital opportunities are in the seed stage. “Later-stage investors will have to wait a year or two before they start seeing more opportunities in Vietnam,” he noted.

The VC firm announced in June that it has surpassed the $50 million target for its flagship early-stage venture capital fund, AVV Alpha.

According to Tran, Vietnam is entering a “golden age” for early stage investment opportunities, due to extensive government support, market accessibility and strong technical talent. By 2025, the overall Internet economy in Vietnam is likely to reach $57 billion in value, growing at a 29 percent compound annual growth rate, a report from Google, Temasek, Bain & Co. showed.

“Market growth is attracting new top-tier investors, including those from Silicon Valley, to the Vietnam market. To put things more in perspective, the total volume of VC deals in Vietnam in 2017 was only $48 million. It grew to $800 million in 2019 and reach a record high of $2.25 billion in 2021, he said. It is also worth noting that Vietnam is emerging as a leader in blockchain gaming and DeFi, he said. According to a recent report by Chainalysis, ranking Vietnam as number one for crypto adoption and number one for DeFi adoption in the world.

In the interview, Tran also shared his view on the VC firm’s plans and exit strategy and his view on the technology ecosystem in Vietnam, among others.

Prior to AVV, Tran was General Partner of 500 Startups Vietnam and co-founded Klout, the Kleiner Perkins-backed social analytics company in San Francisco. Since 2012, Tran has carried out over 50 seed investments.

Below is the edited excerpt of the interview:

Ascend Vietnam Ventures has raised more than $50 million for its flagship fund. Can you share more about which sectors Ascend Vietnam will focus on and why?

We invest in sectors with challenges common to the diverse Southeast Asia region, allowing us to address large markets. The potential for technology to create value in the region is still early, so we are sector agnostic. However, AVV gives high priority to FinTech, blockchain, EdTech, Future of Work and SaaS because we see more investment opportunities there. Startups that can help millions of SMEs use software and data in their businesses and startups that capture a major shift in consumer behavior are our top priorities.

What are the ticket sizes? Any timeline for when the funds will be fully distributed?

We are developing a concentrated portfolio. We invest in the seed rounds of 30 companies with initial checks of up to $2 million, but can lower our check to $500,000 under the right conditions. In the first two to three years of the fund, we will distribute to these 30 companies and then spend the next two to three years investing half the fund in follow-on rounds of the top 10 companies.

What are the opportunities and challenges for investing in startups in Vietnam? How is the deal flow?

Since Vietnam has a nascent ecosystem, most venture capital opportunities exist in the seed stage. Later-stage investors have to wait a year or two before they start seeing more opportunities in Vietnam. The government’s broad support for startups, an increase in available capital and a nation of entrepreneurs make it difficult to evaluate the large number of deals. Depending on the industry, fewer barriers to entry mean more competition, which leads to the challenge of evaluating many companies with similar solutions without sufficient differentiation.

What are the tech startups/tech trends seen elsewhere that Vietnam should also have/catch up on?

Although Southeast Asia is considered to be 10 years behind China, Vietnamese investors are not only looking to China for trends. To get a sense of what might work in Vietnam, investors often look to markets like India and Indonesia because of similarities in infrastructure, demographics and ecosystem maturity. India and Indonesia, for example, are booming with SME enablement and financing, and companies like Kilo have already developed solutions that address similar issues.

Can you share more about Ascend Vietnam Ventures’ exit strategy? Is it harder to exit in Vientiane compared to other markets?

A US IPO is the ultimate goal for most VCs, but in reality most companies will exit via mergers and acquisitions (M&A) and strategic acquisitions, or secondary sales. The secondary market is quite active, but exits for later-stage companies that are too small for a US IPO can be challenging. The ecosystem is so young and there are so few potential buyers for a large later company, that liquidity for these companies can be difficult not only in Vietnam, but in the entire region.

How is digital adoption in Vietnam? How is the general startup ecosystem in Vietnam?

70 percent of the population in Vietnam is under the age of 35, which is a natural advantage when it comes to digital adoption. For example, Vietnam is among the top five global markets for YouTube. This adoption does not appear to be slowing down as the Vietnamese government announced in 2021 a new goal of having the digital economy contribute 20 percent of the country’s GDP by 2025.

Vietnam is entering a “golden age” for early investment opportunities due to extensive government support, market availability and strong technological talent.

Public support – The Vietnamese government is supporting startups now more than ever before. Since 2016 was dubbed “the year of the startup,” things have come a long way. Vietnam is one of the most accessible ecosystems in Southeast Asia, leading to faster startup maturity.

Market Availability – The fact that 97 percent of businesses in Vietnam are SMEs and few large conglomerates act as gatekeepers makes Vietnam very accessible for both local and international companies to enter the market and grow their businesses. Fierce competition for startups means that entrepreneurs have quickly adapted to gain competitive capabilities.

Top global investors coming to Vietnam – Market growth is attracting new top-tier investors, including those from Silicon Valley, to the Vietnam market. To put things more into perspective, the total volume of VC deals in Vietnam in 2017 was only $48 million. It grew to $800 million in 2019 and reached a record $2.25 billion in 2021.

Vietnam is emerging as a leader for blockchain gaming and DeFi – According to a recent report from Chainalysis, Vietnam is ranked number one for crypto adoption and number one for DeFi adoption in the world.

Ascend Vietnam Ventures surpasses $50 million goal