29 Jul THE ASCENT vol. 6: Strategizing for the Funding Winter
Above: AVV & our partner, Australian DFAT, celebrating our SHINE women founders and other enterprising women of Vietnam at our SHINE Women in Tech Gala.
Having crossed the mid-year mark, we are happy to see Vietnam continue to gather strong growth momentum, with Q2 GDP growth hitting over 7.7% on-year and strong confidence across local and foreign enterprises. However, the country’s optimism is not without caution given compounding factors such as the Russia-Ukraine geopolitical tension resulting in fuel and commodity price spikes, higher interest rates in major economies, and a potential global recession.
That sentiment is also reflected in the local startup scene. Even though the tech ecosystem here has been relatively insulated from the funding winter compared to major financial & tech centers worldwide, companies still find fundraising and exiting more challenging (learn more under Vietnam Tech in The News). As a result, investors and startups here are taking preemptive measures to prepare for a tougher financial climate – if you’re interested to learn more, check out our Spotlight story for further details and analysis.
On to AVV updates – June and July have been very eventful for our team. Our early-stage fund, AVV Alpha, has exceeded the $50M fundraising target, and we continue to actively back diverse founders that are building globally iconic startups from Vietnam. We also hosted the SHINE Women in Tech Gala and actively engaged with founders in Hanoi and Ho Chi Minh City through our own social events and various activities run by our friends in the ecosystem. Connectivity will continue to be a priority for us, so stay tuned for more in Q3 and beyond.
Until next time,
Vietnam Tech in the News
1. AVV’s early-stage fund AVV Alpha exceeded its $50M target, seeding up to $2M into 25 startups and following on with checks of up to $5M. With AVV Alpha, we have been exploring a broad range of tech opportunities, including those in financial inclusion, education, and future of work. The fund has invested or committed to 10 startups in the past 9 months, such as B2B e-commerce startup Kilo, e-commerce fulfillment platform T&C Logistics, remote internship placement platform Virtual Internships, and social commerce enabler Mandu. If you are a founder looking for an investor and long-term partner to help you build a global or regional market-leading company, reach out to us here.
2. UK-based data and analytics company Ascential acquired e-commerce enabler Intrepid Group Asia in a deal valued at up to $250M. In June, DealStreetAsia published an article reporting the gloomy exit outlook for Vietnam’s big tech startups. Traditional exit avenues such as IPO, trade sales, M&A, or SPACs all seem to be tricky or unfavorable in the recent down cycle. Intrepid’s acquisition, however, came as a silver lining for a number of investors. Intrepid’s regional position is a key factor that attracts a global public company like Ascential. In particular, the acquisition of Intrepid will serve as a gateway into SEA for Ascential’s clients and strengthen its digital commerce division’s activities in the region. [Disclaimer: Intrepid is a 500VN portfolio company.]
3. Besides Intrepid, e-commerce enabler Onpoint also hit the headline with its $50M Series B round from SeaTown Private Capital Master Fund. This is the largest private funding round in this sector in SEA, according to Onpoint. The company will use the fresh fund to strengthen its capabilities, develop emerging technology, and fuel its regional expansion (potentially to Singapore and a few other countries in SEA). Meanwhile, its Thai peer, aCommerce, is planning to foray into Vietnam after establishing its footprint in five other SEA countries.
In the fintech sector, proprietary stock trading platform Anfin raised $4.8M in a pre-series A round led by Clement Benoit & Y Combinator. Financial service app MFast (tech-driven agent banking network and marketplace for financial and insurance services) closed a $2.5M funding round led by Ascend Vietnam Ventures with the participation of Wavemaker Partners, Do Ventures, and JAFCO Asia.
4. Digital-only banks are facing an uphill battle in Vietnam. Tech in Asia published an article discussing the digital banking landscape in Vietnam. The lack of a regulatory framework to license digital-only banks remains a critical pain point for startups here. The State Bank of Vietnam (SBV) has made some moves to promote technology adoption in the financial sector, e.g., releasing the second draft of a regulatory sandbox for fintech and allowing peer-to-peer lending or credit scoring to be applied on a pilot basis. However, it is unclear whether a similar initiative for digital-only banks would come out anytime soon. Meanwhile, the mobile apps of traditional banks remain dominant in terms of downloads and active users.
5. Propzy and Shopee took pre-emptive measures in anticipation of a tougher fundraising climate. Shopee laid off staff across Southeast Asia, including Indonesia, Thailand, and Vietnam, to “rationalize its e-commerce business”. Meanwhile, in an attempt to reduce burn, Propzy announced the dissolution of one of its Vietnam legal entities related to direct sales just two years after raising a $25M Series A. Other companies are also adjusting their strategies to adapt to the funding winter. More information in the Spotlight story below.
Strategizing for the Funding Winter in Vietnam
The “funding winter” is a global macro event happening across various financial and tech centers of the world including Silicon Valley, India, and Singapore. However, preparing for a slowdown in investments may not be top of mind for Vietnamese entrepreneurs as the country still boasts economic growth and a healthy tech scene with little indication of macroeconomic recession signals being experienced in other parts of the world.
“This funding winter is just part of the normal cycles we have already seen. We are ready to invest and will continue to deploy capital through this downturn,” said Binh Tran, General Partner, Ascend Vietnam Ventures. However, startups should not be caught off guard. Founders should be increasingly focused on unit economics and build a strong foundation for sustainable growth.
Read on to find out more about how startups in Vietnam strategize for the funding winter, given the challenges and opportunities at hand.
AVV in Action
1. Honoring and championing Vietnam’s enterprising women in tech. The SHINE Women Founder Initiatives officially wrapped up in June with two final bootcamps on Leadership and Exit Strategy. By the end of its journey, SHINE had provided 600+ hours of training, mentorship, and networking opportunities for 60+ women entrepreneurs and startup executives from across Vietnam and formed a true support network for women business leaders in tech. To share our learnings, spotlight these amazing women, and call for further support for them, we hosted the SHINE Women in Tech Gala at the end of June with the participation of ~130 guests from the ecosystem. We hope that our ‘Shiny’ founders felt celebrated at the event, and we look forward to working with more partners to continue uplifting enterprising women in Vietnam.
2. AVV & Friends in Hanoi. Our investment team came back to Hanoi on one of our regular visits. Just like last time, we organized an AVV & Friends networking event for local tech enthusiasts to connect and socialize. The event welcomed over 50 participants, including our special guest, Vu Van, founder & CEO of ELSA. Sharing her journey in a fireside chat, Vu gave other founders lots of candid and practical advice on growth, fundraising, leadership, and hiring across different stages of a startup. The session was highly engaging and helped initiate meaningful conversations among many attendees. If you are interested in joining AVV’s next social gatherings, let us know!
3. Rooting for future entrepreneurs arising from student activities. Summer is always the most vibrant time for students with a passion for entrepreneurship. As frequent judges for a number of business competitions for students such as FLAGUP Startups Contest and Youpreneur Launchpad, we have always felt energized by contestants’ enthusiasm and entrepreneurial spirit. We are excited to further collaborate with student organizations and universities to support and nurture the next generation of entrepreneurs in Vietnam.
4. Can machines learn from human experience? Are you interested in the bleeding edge intersection between Human and Machine Intelligence? Sign up for the K1st World conference held on Stanford before September 1 and receive a 60% discount using the code “AVV60″. The event has the participation of Christopher Nguyen, Co-Founder & CEO of Aitomatic (AVV portfolio company), a knowledge-first machine learning company that works with leading industrial companies like Panasonic, Tesla, and Westinghouse to help them drive growth and innovation. Interested audiences outside of the U.S can register to participate online.