23 Jun Why we started Ascend Vietnam Ventures
- We have finished deploying our first Vietnam-focused seed fund, 500 Startups Vietnam
- We’re launching a new firm to invest larger checks and to provide more support for a more concentrated portfolio of companies
- We remain committed to 500 Startups Vietnam and will continue to support our companies and founders and maximize returns to our investors
When we first considered launching 500 Startups Vietnam, the startup landscape in Vietnam was completely different from what it is today. Back then, tech startup founders were few and far between, toiling away with limited resources or guidance. There were just a handful of early-stage investors in a tech ecosystem where terms like convertible notes, minimum viable products, and cap tables were foreign. To give a sense of how young the ecosystem was, the total amount of venture capital invested in Vietnam in 2017 was $48 million¹, a minuscule amount for a country of almost 100 million people. Fast forward just two years later to 2019 and that number has approached $1 billion². Startups like ELSA, Trusting Social, Axie Infinity, and Earable have attracted global investors such as Sequoia, Founders Fund, Gradient (Google’s AI-focused fund), and Mark Cuban.
Venture capitalists often use pattern matching when evaluating startups in order to reduce risk and identify exceptional teams. However, as first-time fund managers in such a nascent tech ecosystem, this was an impossibility for us. We had a few unanswered questions such as:
What problems are founders looking to solve?
What do startups here need to succeed in Vietnam and beyond?
What are we uniquely good at?
500 Startups was one of the first Silicon Valley venture capital firms to systematically invest outside of Silicon Valley. Their mission to serve entrepreneurs anywhere in the world and their strategy of “many small bets” was a great fit for us and for Vietnam’s then-nascent tech ecosystem. This strategy implemented across the region with our good friends Khailee, Vishal, Krating, and Moo allowed us to quickly collect information and signals across the market, build out our capacity and networks in sectors where we saw more growth and innovation, invest in and support more teams, and gain the valuable experience one only obtains after completing so many investments.
Fast forward to today, we have assembled an amazing team, built a portfolio that already includes one unicorn and three centaurs with others on the way, and by certain metrics forecast being a top-decile fund globally by mid-year³. The tech ecosystem has also grown and matured as we’ve seen an increase in the number and quality of founders who are building deeper solutions. We’ve also seen seed rounds more than double in size and seen dozens of early-stage investors join us in finding the region’s next market leaders.
The past five years have not been without miscalculations. Although we invested subsequent checks into a handful of our best performing companies, we wish we had even more capital to put to work with these exceptional teams. And we wish we had more time to fully leverage our operational, growth, and fundraising experience to help our founders.
As the tech ecosystem in Vietnam has evolved, so has our strategy. That’s why we are launching Ascend Vietnam Ventures (AVV). AVV will seed $500K to $2M into 25 startups over the next three years. A third of those companies will receive further investment from us of up to $4M each.
We remain committed to 500 Startups Vietnam. We have a dedicated team to help us support our companies as they continue to scale and to maximize returns for our earliest supporters, our LPs.
The Southeast Asia region continues to mature and there exists sufficient capital across all stages for founders. It is at an inflection point where what it took companies to be the regional or global winners of today is insufficient for the winners of tomorrow. With a smaller portfolio, we’ll have the time and resources needed to help each portfolio company build advantages in three critical areas. While these competencies are formed within the first 18 months of a company’s formation, they span the entire life of a company to serve as differentiators in an increasingly competitive world:
- People – Great people are the foundation of iconic businesses. What values does the founding team represent? How do you curate, celebrate, and grow this culture? How do you build a recruiting brand that reflects that culture and attracts world-class talent? How do you unleash that talent while keeping them aligned and incentivized towards the right objectives?
- Growth – Authentic growth creates sustainable value. Which customer segments should you target first? How do you find capital-efficient, repeatable, scalable growth through deeper customer understanding, robust analytics, and effective experimentation? What adjacent markets or game-changing partners can 100X your business?
- Capital – Smart, well-timed capital multiplies impact. How can you best-articulate your vision to investors? How can you find a clear path for your capital journey? How do you get the right money from the right investors on the right terms at each inflection point of your business? And, when the time is right, how do you transition your company to its next phase (e.g. acquisition or IPO)?
For the past three decades, Vietnam has been the fastest growing market in fast growing Southeast Asia and is forecasted to continue to play a critical role in the region for years to come. In fact, we believe that Vietnam in the near future will be a new tech capital. Rather than take a protectionist stance, Vietnam’s openness to global players creates a competitive environment forcing tech founders to be scrappier, data focused, and more open to international collaboration and expansion. Meanwhile, local and foreign founders alike find themselves in an attractive and accessible place with a low cost of living, a safe and stable society, and a large and affordable talent pool with some of the best engineers in Southeast Asia. In addition, many of the problems, spending capabilities, and behaviors of consumers and SMEs that exist in Vietnam are likely to be found also in emerging markets across Asia Pacific and beyond.
Founders will find that the best place to start building Southeast Asia’s market leading company is in Vietnam and we will be here to support them.
Binh and Eddie