A customer buys lychees online via MoMo app. MoMo raised 200 million USD from four investors in late 2021, pushing its valuation above 2 billion USD.(photo: VNA) In 2021, Vietnamese startups received over 1.4 billion USD in investment, arelatively large number in ASEAN. However, the number dropped by 40% to 855million USD last year and is forecast to fall further this year.
Le Hoang Uyen Vy, CEO of Do Ventures, asserted that unfavourable macroeconomicconditions were to blame for the startup investment tanking over the past fewyears.
She said high policy and inflation rates, coupled with global uncertainties,had driven investors to cut back on spending.
As such, they had pumped their brakes on venture capital to avoid risks andshifted their focus to startups with sustainable growth potential.
"Startups that have a long-term vision are more likely to get funds frominvestors", said Vy.
Tran Bang Viet, CEO of Dong A Solutions, asserted that the global economicrecession would cause a further dip in startup investing in 2023. That meansinvestor appetite was expected to shift away from risky startups to those withstable performance.
"Investment in seed-stage startups would plunge this year", said Viet.
CEO Vy believed that it was time for Vietnamese startups to think for the longterm. She said they should switch from a scale-centred to a product-centredstrategy to consolidate their position during the down periods.
"Many startups spend most of their capital on advertising rather thanR&D, and they have to pay the price for hasty scaling", said Vy.
Le Huynh Kim Ngan, director of ThinkZone Ventures, remarked that investors hadbecome more selective about startups. They now cared more about startups'sustainability than their short-term financial situation, which, they believed,was for show only.
"Simplicity and efficiency will be used as a yardstick against which tomeasure a startup's performance," said Ngan.
The director forecast that two sectors attractive to startup investors thisyear would be finance and education. The other two sectors that would witnessstable capital inflows were cybersecurity and the Internet of Things.
As venture funding is falling year by year, startups have to rely on bank loansto supplement their capital and prevent valuation drops. For instance, Be Grouptook out a loan of 60 million USD from Deutsche Bank in 2022.
Nguyen Ba Diep, deputy chairman and co-founder of MoMo, said that startupsneeded to present their spending and revenue in great detail to captureinvestors' attention and nudge them towards their profile in the first place.
He also asserted that financial mismanagement had been the cause of mostshort-lived startups. As such, a well-developed financial strategy would holdthe key to startup's viability and success.
Amid the capital scarcity, S&P Global recommended that unicorns choosebetween aggressively expanding to reach economy of scale or focusing onreigniting their business.
"The startups cannot continue spending if operational turnarounds aredelayed and cash balances are narrowing while fundraising remainsdifficult," said S&P Global.
Last year, startup deals of over 50 million USD fell by 55% in number. Thosebetween 500,000 USD to 3 million USD followed suit with a fall of 20%. Thesituation was not better even for those of less than $5000 in the seed stage,witnessing a fall of 19%./.
VNA
