Vietnam is slated to become the breeding ground of Asia-Pacific’s next tech startup “unicorn” due to its strong ecosystem and support network, predicts a new report by Asian Development Bank (ADB).

“Asia and the Pacific’s next tech startup “unicorn” may spring from Viet Nam, as the groundwork to build a strong ecosystem capable of supporting these businesses is well under way,” states the report.

In Vichet, co-founder and CEO of MediaLoad of Groupin, Cambodia’s most-invested in startup, told Kiripost, “Vietnam has a few tech unicorns already.” He added that compared to Vietnam, Cambodia’s “market is too small”.

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David Shelters, an entrepreneur-in-residence at Mekong Strategic Partners in Phnom Penh, added, “Producing startups that provide innovation to optimally drive economic growth and inclusion should be the goal.”

The Asia’s startup scene stalwart added,

“Having centaur startups ($100m+ valuations) in as many economic sectors as possible is a better measure of a startup ecosystem's success because centaurs are sufficiently advanced to introduce innovation in their sector from which other stakeholders can leverage.”

Cambodia has about 10 times less startups than Vietnam. In 2021, VN Express online news outlet reported there are about 3,800 startups operating in Vietnam, one of the most dynamic emerging countries in East Asia region, with four homegrown unicorns (companies worth over $1 billion): VNG, VnPay, SkyMavis, and MoMo.

Most of the large angel investors are successful first-generation startup entrepreneurs from the early-2000s, who have invested in the next generation.

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Based on data from Vietnam Chamber of Commerce and Industry (VCCI), the number of business startups per capita in the country is higher than in China (2,300), India (7,500), and Indonesia (2,100).

It said,

“Such rapid growth is the result of a large team of talented managers, founders, product developers, and engineers, including significant contributions from overseas Vietnamese who have returned home to create startups.”

“Vietnam remains a very attractive innovation hub with more incubators, accelerators and innovation labs than most other markets in the region,” according to e-Conomy SEA 2021 research by Google and Temasek.

It added, “Despite market uncertainty, global capital continues to pour into the country given its strong growth fundamentals and growing digital ecosystem. Investment appetite remains strong in digital services that surged as a result of Covid-19, such as e-commerce, fintech, healthtech and edtech.”

ADB economist Aimee Hampel-Milagrosa, one of the report’s lead authors, said, “The Government of Vietnam recognizes that tech startups are the new engines of growth for the country.” Financial and policy incentives can help create and build the next generation of Vietnamese startup unicorns.

With a population of about 97.3 million – about 70 percent are internet users, of which 98 percent are smartphone users – Vietnam is one of the largest technology markets in the region. Yet, “the concept of a startup is still new. Startups first appeared in the country 15 years ago, when several companies were founded that used new technologies in e-commerce and online education.”

It was not until 2016 that all the ingredients for a tech startup ecosystem were first introduced to the country. According to Amway (2018), Vietnam is a global leader in entrepreneurship and has a positive attitude toward starting businesses.

“Vietnam is increasingly becoming a hub for startups in Southeast Asia, competing with regional leaders in creating a favorable ecosystem for startups,” concluded the ADB report, adding that the Asian nation “could very well be the next People’s Republic of China or India in terms of the number of startups that could achieve unicorn status if barriers to ecosystem growth are addressed”.

The digital decade

In Southeast Asia, e-Commerce, food delivery and digital financial services remain primary growth drivers. It is expected that the internet economy will reach $360 billion by 2025.

Continued shifts in consumer and merchant behavior, matched with strong investor confidence, have ushered SEA into its ‘Digital Decade’ - and the region is on its way towards $1 trillion by 2030, said the research by Google and Temasek.