At least once a month, we hear about a Vietnamese startup successfully securing a million-dollar investment. Most recently, investment app Finhay raised $25 million in series B round. In the first quarter of the year, at least 12 startups bagged huge funding. A report by StartupBlink last week highlighted e-commerce, retail, edtech, and foodtech as top industries for emerging startups in Vietnam.
While this solidifies Vietnam’s position as a leader in innovation, the booming startup ecosystem and venture capitalists have seemingly missed a small but growing sector: The eco-focused startup community.
According to newly established firm Earth Venture Capital (EVC), the number of startups focusing on fighting climate change or creating renewable energy technologies isn’t as big as it should be, and more often than not, they don’t fly as high as those in other industries.
EVC aims to empower Vietnamese tech startups that tackle the climate crisis, because “the ultimate goal of investment is to bring prosperity, but there is no prosperity on a dead planet,” said Tien Nguyen, general partner at EVC.
So, what’s stopping rising startup founders and venture capitalists from investing in sustainable entrepreneurship? Tien Nguyen explains Earth Venture Capital’s goal in Vietnam and the importance of giving eco-focused startups the support and financial investment they need to make their green mission possible.
What is Earth Venture Capital’s mission in Vietnam?
Earth Venture Capital is a global early-stage VC firm seeking to invest in digital solutions tackling climate change. While some people emphasize the role of new game-changing technologies, we believe that if we can scale all the clean tech innovations we currently possess, we could greatly speed up our way to a net-zero economy.
The mission of Earth Venture Capital is to energize and empower entrepreneurs to solve climate challenges while, at the same time, delivering good financial returns. In Vietnam, to leverage its large and high-skilled tech talent pool, besides a VC fund with the average ticket size ranging from $300K to $3M, we also operate a venture studio, namely Earth Venture Studio, to co-found climate tech startups with entrepreneurs from day 0.
How many startups have you been supporting since the launch of the VC? How much do you usually invest?
We announced the establishment of our fund in March this year. Within three months, we have been developing a pipeline of 100+ climate tech startups all over the world, one of them is in the middle of the term sheet negotiation process with us, and we hope to close the deal within this month. Our average ticket size ranges from $300K to $3M per startup.
In Vietnam, we are supporting 10+ startups within the scope of the Climate Change Entrepreneurship Hub - an initiative by Earth Venture Capital, supported by the Irish Embassy and Friends of Ireland.
How do you choose startups to invest in?
We invest in early-stage startups: pre-seed, seed, and series A. While our VC fund usually prefers startups with some levels of traction, our venture studio can work with founders as early as the ideation stage.
Across our three pillars (a VC fund - a venture studio - a foundation), we screen startups, founders, and teams on our ABC gold standards, namely, “ambition,” “breakthrough,” and “commitment.”
As we focus on the theme of climate change, we only invest in founders who understand and purposefully plan their impacts from the beginning. However, we don’t require a management team to have a background in either climate change, or sustainability or to have experience running a climate tech startup before.
We favor teams with extensive industry expertise which can be translated into an unfair advantage. We consider climate change as an investment theme that touches multiple industries and verticals including but not limited to agritech & food systems, forestry, logistics & supply chain optimization, energy efficiency, renewable energy adoption, electric transportation, and climate fintech, etc.
We only invest in a startup if we can add values that extend beyond cash: market entry strategies, mentorship, network referrals, etc. With our Earth Venture Studio program, we provide founders with even more hands-on support.
What kind of products do these startups sell or provide?
We see all kinds of products/services: IoT and AI solutions that increase energy efficiency, measure air quality, boost crop yields, predict natural disasters, monitor forest health, optimize warehouse systems; robotic solutions that automate last-mile delivery, effectively clean solar panels, generate electricity; blockchain networks that foster more tree planting, make carbon markets more transparent; platforms that stabilize and optimize the grid, connect multi-stakeholders to facilitate and increase the adoption of renewable energy; technologies that help decarbonize industries; new materials; new protein sources so on and so forth.
Do these kinds of startups get investments often?
In his Letter to CEOs 2022, Blackrock CEO - Larry Fink said that: “The next 1,000 unicorns won’t be search engines or social media companies, they’ll be sustainable, scalable innovators – startups that help the world decarbonize and make the energy transition affordable for all consumers”. Globally, the climate change investment movement has already started. In the Southeast Asia region, we are seeing the establishment of more and more sustainable funds.
How big is the eco-focused startup community in Vietnam?
The eco-focused startup community in Vietnam is still small but we believe that things will be much different in the near future.
The general public perceives climate change as a development topic that the government or non-profit organizations will address. We at Earth Venture Capital see enormous business opportunities out of climate change. The transition to a green economy has already started on a global scale.
With our Earth Venture Studio program, we hope to leverage the large and high-skilled tech talent pool in Vietnam, co-founding startups that aim to address big global problems.
How big is the eco-focused VC community in Vietnam?
In Vietnam, the community of VCs which clearly state “climate change” in their investment thesis like Earth VC is still small.
How important is it for eco-focused startups to get support from VCs like you?
Getting pre-seed and seed funding is one of the biggest challenges for eco-focused startups. International market entry and the capacity to expand regionally, and globally is another one. In developed countries, governments play a good role in providing these kinds of support. In this case, after startups gain a proof of concept and achieve product-market fit, they need to get access to private finance from early investors like VCs to grow their businesses further.
In Vietnam and other developing countries where the ecosystem supporting eco-focused startups is still in its infancy, they might need support from incubators or venture studios like Earth Venture Studio before reaching out to VCs.
What does the future hold for Vietnam’s startup community?
Vietnam appears to be a rising star in the Southeast Asia startup landscape. Sustainability will be a prominent startup trend soon in Vietnam as well as in the Southeast Asia region.