Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: Vietnam Tech - Q3 2023. The report, based on Tracxn’s extensive database, provides insights into the Vietnam Tech space.
Vietnam's tech startup ecosystem continues to make waves, maintaining its position as the third highest-funded startup ecosystem in the Southeast Asia (SEA) region through Q3 2023. SEA region funding peaked in Q4 2021, representing the highest-funded quarter at that time in the region. However, since then, a decline in funding has been observed, partly attributed to the global macroeconomic scenario that has significantly impacted funding in the region.
In the YTD 2023, the region witnessed a substantial decrease in funding, with only $138 million raised, representing a 72% drop compared to the funding during the first three quarters of the preceding year, 2022. Despite this, a World Bank report indicates moderate economic growth for the region in 2023, with expectations of an acceleration in growth over the next couple of years.
The Vietnamese government is taking proactive steps to boost long-term growth within the startup ecosystem. Initiatives include tax exemptions for IT companies and favourable land rent concessions, signalling a commitment to fostering a conducive environment for startups to thrive. Additionally, the government is driving efforts to establish a cashless economy, further supporting the burgeoning FinTech sector in the region.
In a striking turn of events, Q3 2023 witnessed an exceptional leap, with Vietnam's tech startups securing a total of $50.1M in funding—a tremendous 504% increase compared with Q2 2023. Despite this substantial growth, funding was down by 40% when compared with Q3 2022.
Breaking down the funding landscape, the early-stage rounds played a dominant role, contributing almost 98% of the total funding for the quarter, amounting to $49 million. However, seed-stage rounds experienced an 87% drop to $1.1 million in Q3 2023, compared with Q2 2023, and a 92% drop compared to Q3 2022 amounting to $13.8 million.
In Q3 2023, key segments that garnered significant funding included FinTech, Life Sciences, and Enterprise Applications. FinTech emerged as the highest-funded sector, securing $29 million in Q3 2023 and exhibiting a remarkable 180% growth compared with Q3 2022.
While Q3 2023 did not witness any unicorns or IPOs, the Vietnam startup ecosystem remains promising, driven by government support and a strategic push towards a cashless economy. In contrast, there was one acquisition in Q3 2023, marking a 75% decrease compared to Q2 2023 and a 50% decrease compared to Q3 2022.
Notably, Ho Chi Minh City and Hanoi were the only cities in Vietnam that attracted the most significant funding, showcasing their prominence in the growing tech startup landscape. Startups in Hanoi secured funding worth $33 million, while those based in Ho Chi Minh City raised $17.1 million.
Nextrans, VSV Capital, and CyberAgent Capital are the top investors in the Vietnam Tech space. Resolution Ventures and VCAM were the lead investors in seed-stage investments in this quarter. Peak XV Partners, Granite Oak and JAFCO Asia were the most active investors in the Early Stage
As Vietnam's startup ecosystem continues to evolve, collaborations and strategic investments are expected to propel growth and drive innovation within the region.
