VIISA: Scoping Investment Opportunities With Vietnam Innovative Startup Accelerator | Vietcetera
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Nov 19, 2017

VIISA: Scoping Investment Opportunities With Vietnam Innovative Startup Accelerator

Vietnam Innovative Startup Accelerator Director Adrian Tan on investments, Vietnam’s entry into the international IT sector and a need for trustworthy teams

VIISA: Scoping Investment Opportunities With Vietnam Innovative Startup Accelerator

The international press have been flooding us with stories of Vietnam’s fast-emerging tech sector. This has been driven by reports of exponential increases in the number of internet users, a figure that is now put at 50 million nationwide, and its 10% annual growth rate.

One of the investment firms helping to support this early-stage growth is the accelerator and seed-stage fund Vietnam Innovative Startup Accelerator (VIISA). As they plan to invest US $6 million into 100 globally-oriented Vietnam-based startups, we invited VIISA’s Director Adrian Tan to our office to chat more about his vision for the fund, and where he thinks Vietnam’s startup ecosystem is going.

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How do you think Vietnam’s business landscape will look in ten years?

I have spent a lot of time thinking about this question. Right now, people are primarily interested in how to get more money and funding. But what’s next after we achieve this is the real question. There are a lot of Vietnamese entrepreneurs with inspirational visions, but the groundwork has still not been laid. This is one of the biggest problems we face, and we are constantly working to improve things. We’re not just talking about small technology startups here but also heavy-hitting companies like FPT.

Luckily right now, everyone seems to be asking the right questions. Instead of blindly wanting Ho Chi Minh City to be like Singapore, we are asking ourselves, “How do we develop and what tools do we need to do so in a sustainable way?” I’m confident that Vietnam will get there, even though I can’t accurately predict when.

Who is Vietnam Innovative Startup Accelerator looking to invest in?

We want to invest in people, not companies. And it’s not necessarily about ideas or intelligence, but more about who the person really is. How do they react to stress? How do they respond to having funding—but also how do they handle having no funding at all? Capital is not the scarcity here, it’s actually trust. And Vietnam Innovative Startup Accelerator is building that circle of trust, and then compounding it.

What other traits do you look for when searching for investment prospects?

We look closely at the team with all our clients. The team needs to demonstrate a mastery of their craft and a collective vision. There are many great ideas floating around but not many teams can see the entire process through to make things happen. Not to mention, some teams aren’t able to do the boring or unfamiliar stuff and this is also a key factor. Today, businesses must strike a balance and be able to do a little bit of everything.

What investment-worthy industries are you most excited about now or in the near future?

Vietnam is on an upward trajectory, and nearly every industry is reaping the benefits. For technology specifically, Vietnam is lacking in some areas like product, the user experience, and having a regional mindset. But more and more of the workforce are equipped with the education and experience to make it happen. There is no doubt in my mind that we’ll have some strong international technology companies rolling out in the next two or three years.

The challenge right now is convincing traditional investors to put money into venture-backed technology startups and venture investment funds that usually provide a return many years later at larger multiples. We’re up against rates like a 7% yearly return on bank deposits, and 30% margins in food and beverage. For anyone involved, these are hard figures to work with.

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And are there any up-and-coming Vietnamese brands either in technology or other sectors that are capable of impacting the international stage?

Before the recent economic boom, the technology industry here predominately consisted of offshore development houses that were helping to build overseas brands. Today, however, there is much more interest in the local scene. Many technology companies are thinking about how to become a global or at least a regional name. People are taking action to ensure their position in the race rather than assuming success will just occur. And to me, this is a make or break mentality.

There are many impressive technology companies around, like VNG. They have been rated as a unicorn company—a startup valued at over US $1 billion. But, the reality is that most people overseas may have never heard of them. Still, I do think Vietnam is well on its way to hosting a handful of household names if we continue on the same path. Businesses and companies are more driven than ever, and I don’t think there is much that can stop them.

For non-technology companies, there are the obvious brands like Marou Chocolate and Pasteur Street Brewery which are paving the way for others wanting to enter the international market.

What is VIISA’s largest and most exciting investment to date?

WisePass is one of our most exciting projects. Their team is comprised of people that can execute and get things done. They also had a global mindset from the beginning, and are able to navigate the complexities of the international business scene. Their team can move fast and they don’t miss a beat. And if you want to dominate the market, this is exactly the kind of mindset that you need to have.

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What are some interesting things to know about VIISA?

We are probably Vietnam’s main accelerator. We invest up to US $15,000 per project after looking at the long-term opportunities and not just the short-term potential. This is unlike most get-rich-quick business models here. We invest real money, as well as in-kind services and products.

It is also worth mentioning that Vietnam Innovative Startup Accelerator is a startup itself. We have a diverse community of investors and startup founders. We are currently working with FPT Hanoi, Dragon Capital Ho Chi Minh City, Hanwha from Seoul, and of course myself from Singapore. Because our startup founders are from many different places we are enjoying broader exposure.

We are also pathfinders keen to explore the unknown. For example, right now we are trying to figure out how angel investing would work here—when an affluent individual provides capital for a startup based in Vietnam where laws for venture capital don’t exist yet. We are also looking at how convertible notes would work, trying to understand whether it’s feasible here for an investor to lend money for a startup’s equity.

Finally, we also provide guidance about challenges like incorporation—it could be a situation where a company is already set up in Singapore, but their Vietnamese partner is not yet incorporated in any form. In situations like this, we have lots of experience to bring to the table.

Why did you chose to relocate here? How has your transition to Vietnam been?

I remember there was a sense of optimism and possibility in Singapore back in the late 1990s before the financial crisis. It was an exhilarating time. People were upgrading their homes and getting better jobs, and you could feel the excitement. Life was full of possibilities. But the Singapore that I know now is not the one that I grew up in. Vietnam’s current growth reminds me of Singapore’s during that earlier time. The sheer pace of development here astonishes me. Then FPT approached me to set up an accelerator here. Of course, there were many considerations around whether to make this kind of move. I have a family with three young girls to think about. But we had also traveled here before, so we had a basic understanding of what to expect, and we decided to make the transition.

It’s been a roller coaster, to be honest, but what I appreciate here is that people are generally quite forgiving. Some expats complain about the complexities of living here and that included me after spending my first year in Vietnam. Fortunately, my family have adapted well. They not only enjoy going to coffee shops and restaurants, and places in District 2 where we live like the new trampoline park, but they also love visiting out-of-town places like Hoi An.

Who should we speak with next?

I think there’s a fascinating story to tell about why people are uprooting themselves from Silicon Valley to move to Vietnam. I am thinking of people like Theodore Kim, the former Director of Developer Operations at GoPro. He moved here several months ago. He’s Korean-American and has invested in some startups in Vietnam and plans to build his own as well.