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ANALYSIS

Capital in decline

Vietnam and the region have faced a significant weakening in private funding for tech
startups as investors grapple with difficulties in investment lifecycle, fundraising, and exits.

| By INNOLAB ASIA RESEARCH TEAM

ietnam has emerged as a key INVESTMENT LANDSCAPE IN 2023 annual pace since 1997, and is anticipated
player in Southeast Asia’s dynamic Vietnam has established itself as a stable, to hit $690.11 billion in 2027, according
V investment landscape, offering rapidly developing, and high-growth des- to IMF forecasts. The total value of its
promising opportunities for investors tination for international business and for- goods is expected to post a compound
seeking to capitalize on the region’s eign investment, with more than 208 ven- annual growth rate (CAGR) of 20 per cent,
growth. As we delve into Vietnam’s invest- ture capital (VC) funds, including 40 domes- from $30 billion in 2023 to nearly $45 bil-
ment landscape in the 2020s, it becomes tic funds. According to the Government lion in 2025. Contributing to that growth
evident that the country’s digital economy News, after Covid-19, the number of VC will be key industry groups such as e-
is on a trajectory to reach $45 billion by funds in the country gradually started to commerce, transport, food, online travel,
2025, according to the e-Conomy SEA grow again, with $634 million invested in and online media.
2023 report from Google, Temasek, and 2022 and then $413 million in the first Despite the global macro-economic
Bain & Company, fueled by robust expec- half of 2023. headwinds, Vietnam is on track to achieve
tations of economic growth. However, Over the past five years, Vietnam has the government’s target of its digital econ-
amid these positive prospects, investors weathered global macro-economic head- omy accounting for 30 per cent of GDP by
are facing myriad challenges in all stages winds with more resilience than elsewhere 2030. A favorable business climate, robust
of the investment lifecycle, with exits around the world, posting nominal GDP economic growth, and strong government
being top of mind. growth of 8.02 per cent in 2022, the fastest support have positioned the country as an

36 | VIETNAM ECONOMIC TIMES | FEBRUARY 2024 en.vneconomy.vn