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THE ASCENT vol.1 – Vietnam’s digital growth, blockchain startups & MSME retail digitalization

Above: A fundraising training session for entrepreneurs in AVV’s SHINE woman-focused incubator

Hello everyone,

Welcome to the first edition of AVV’s newsletter, the Ascent, and thanks for being an early subscriber 🙏 . If you came here via our last 500 Startups Vietnam newsletter or have otherwise stayed updated on our activities, you can probably recall that 500VN is fully deployed, and AVV is our succeeding act to find and back startups in Vietnam. As we continue to keep our ears to the ground, we are excited to share the latest market intel with you monthly(ish) via this newsletter.

The Ascent has three main sections:
1. “Vietnam Tech in the News,” where we highlight notable news in the Vietnam tech scene plus our quick take on why it matters
2. “Spotlight,” where we take a deeper dive into a particular topic of interest to our audience, e.g. investment trends or startup insights
3. And “AVV in Action,” where we share what we have been up to and where you can catch us next.

We will be doing some experiments to learn how we can deliver the most relevant and value-add updates to you. As you read our newsletter, if you have any feedback, do let us know!

Now, onto some quick macro market updates. Vietnam is zeroing in on economic recovery post-prolonged COVID lockdowns. At the online World Economic Forum in late October, the country’s PM shared the master plan with 6 key pillars including restoring supply chains and large-scale investment in inter-regional transportation, green energy, and digital infrastructure. In November, the government also approved a 2021-2025 Restructuring Plan, of which a main focus is digital transformation, with a target set for the digital economy to account for 20% of GDP by 2025. They are not the only one bullish on Vietnam’s digital sector. In Google, Temasek & Bain’s 2021 e-Conomy SEA report, Vietnam is forecasted to be the fastest-growing Internet economy in the region (more on this in “Vietnam Tech in the News” below.)

Zooming in on AVV, despite a long lockdown in Saigon and other COVID restrictions, we were happy to announce the launch of our firm in early Q2 and have been heads down on supporting founders. We ran several initiatives for women entrepreneurs, one of which is the SHINE incubator program (learn more in “AVV in Action.”) We are also actively investing (check out the Spotlight section for more details on one of our latest deals, Kilo.) Overall, a lot of positive initial progress for our young firm, and we are thankful to you for the early support. We cannot wait to finish the year strong.

Happy upcoming holidays and until next year! 🎉

The Ascent

Vietnam Tech in the News


1. Google, Temasek, and Bain released their latest annual report on Southeast Asia’s digital economy, and it is bullish. The regional market is estimated at $174B in 2021 and could reach up to $1T by 2030. Among the ASEAN 6 countries, Vietnam is forecasted to have the strongest growth, becoming the second-largest digital economy in the region (reaching 2/3 of Indonesia despite having 1/3 the population). This growth prospect is partially fueling increased deal activity here: the report estimates that $1.4B was invested in tech companies in the first half of 2021, nearly the same amount in 2019 and 2020 combined ($1.6B).

2. The blockchain force is strong with Vietnam. In October, we witnessed the rise of Sky Mavis, the 3rd and fastest-growing Vietnamese unicorn. Their flagship NFT game, Axie Infinity, pioneered the Play-to-Earn model and revolutionized the global gaming industry (hear Jeff Zirlin, one of the co-founders, shared more on the potential of P2E in this Bloomberg feature.) With Sky Mavis’ success, investors around the world are keeping a close eye on blockchain projects arising from Vietnam such as Sipher and Coin98. Where do we stand, you ask? Blockchain, like social or mobile, represents a paradigm shift in tech. If Vietnam’s tech was still too young to ride the social and mobile waves, we think it is now ready to explore the greenfield area that is blockchain, and we see many entrepreneurs gravitating towards it. It is a global phenomenon, but with its pool of abundant and strong engineering talent, Vietnam definitely has an edge in birthing the next successful blockchain startups.

3. E-commerce & enablers had a tough few months but are charging ahead regardless. Tiki reportedly raised $258M in a funding round led by AIA Insurance as the company plans its U.S. IPO. Meanwhile, Vietnam delivery startup Loship is in talks with Daiwa Securities to raise a $50M Series C. We anticipate this positive trend to remain into 2022 as ongoing movement restrictions from COVID-19 continue to spur e-commerce activities.

4. Accelerator activity is accelerating. Y Combinator accepted their 4th Vietnamese startup in the past year, investment app Anfin, after investment app Infina, real estate financing startup Homebase, and earned wage advance startup Nano were previously accepted. Techstars has also been getting involved, with sustainable consumer goods startup EQUO and prosthetics startup Vulcan Augmetics joining their 2 latest batches (side note: Both are women-led startups that were in our SHINE program.) Antler recently launched their first Vietnam program cohort with 70 participating entrepreneurs. (Another side note: For the record, 500 Global accepted its first Vietnamese company in 2013.)

 

Spotlight: Kilo, enabling MSME retail in Vietnam

 

Founder Kartick & some of the Kilo team members

Last month, we were excited to announce one of our latest investments, Kilo. Founded by e-commerce veteran Kartick Narayan (ex-Amazon, -Coupang & -Tiki), Kilo simplifies the procurement process for traditional mom-and-pop stores by connecting them with wholesalers via a marketplace and providing real-time order & inventory management. As one of their first investors via 500VN, we have been working with Kartick and the team since their early days. We are thrilled to join this pre-A round alongside Altos Ventures, January Capital, Goodwater Capital, and others and continue supporting Kilo in their mission to empower 1.4M MSME retailers in Vietnam.

One of the elements that drove our decision to invest was Kilo’s proven ability to execute. The team opted for a customer-first and asset-light approach from day one. Rather than trying to disrupt the supply chain, they set out to enable existing small retailers and wholesalers. Our GP Binh remarked, “We were hoping Kilo’s more inclusive approach to bringing digital commerce to mom-and-pops would reduce friction from scaling, and we were right.” Within ~1 year since launch, Kilo quickly expanded their footprint across many provinces and achieved 700X growth in GMV to $100M+. All of this was made possible by a strong team that really embodies a user-centric mindset. We have seen first-hand how they constantly collect feedback from customers and iterate to improve their product offerings. For instance, they recently introduced a one-click communication mechanism to provide instant customer support and training and heavily modified ElasticSearch to deliver better search results for customers for the Vietnamese language.

Kilo’s vision does not stop here. There is a great deal of value and impact that the team is well-positioned to capture, and they already have financing, logistics, and self-service e-commerce store creation features lined up in their roadmap. With this round of funding, Kilo plans to grow the team by 4x in the next 12 months. If you want to build a killer and high-impact product that serves millions, check out job opportunities with Kilo such as Product Owners and Full-stack Engineers or reach out to AVV for an intro.

 

AVV in Action

 

1. AVV is proud to have organized SHINE, an incubation program dedicated to women founders in Vietnam, in partnership with Australia DFAT’s Investing in Women Program. SHINE provided training and mentorship to 11 early-stage women-led startups in various sectors to help them articulate the narratives for 3 key pillars of their businesses – growth, people, and capital. From that, we hoped to help them gain more clarity and confidence to find their paths forward. If you are curious about SHINE or want to work with us to help more women founders, ping us for a chat.

2. At the recent Wild Digital Southeast Asia conference, our GP Eddie spoke in a panel on investing in Vietnam. The panelists discussed the tech talent landscape in Vietnam, a no-longer-hidden-secret ingredient that could help Vietnam leapfrog in deep tech and become the region’s digital hub. Bobby Liu, the moderator, touched on our decision to invest in Axie Infinity back in 2018 via 500VN. “What were you thinking?” was the question posed to Eddie as he pointed out how little was known around NFTs back then. We are really curious what his answer was.

3. Last month, Binh sat down with the Understanding VC podcast to share the personal journey that led him to start Klout and become a VC in Vietnam later on. In this podcast episode, you will find snippets of Binh’s life that might surprise you (and even us on the AVV team!) Fun fact: Binh was involved in the development of PlayStation 1 and Nintendo 64 games, where he inserted himself as a villager inside the gameworld, potentially as the first Vietnamese game character.

4. Our investment team has been active at TechFest 2021, the largest annual national tech conference. Thao, Minh, and Le have been supporting different TechFest events and activities in different capacities such as pitching judges, mentor, and panelist. There is more programming until mid-December, including the final round of TechFest’s pitching competition where our Partner Hau will be a judge. Check out programming details here.

5. Starting from October, the AVV team could finally meet in person again after ~5 months of WFH-ing. Here is a photo of our (almost full) team + friends’ first gathering post-lockdown. We are also hiring for several roles — Communications Officer, Legal Counsel & Compliance Officer, and Women Founder Initiatives Program Manager. If you are interested or know someone who might be a great fit, let us know!

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