The exit from the previous investment cycle was ideal.
The author of this article is Nguyen Thi Bich Ngoc, the original title Investors in Vietnam cash out profitably from tech Deals as exits pick up
Point Tip:
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It’s not so difficult to quit: Southeast Asian unicorns enter, private equity capital bets, local CVC throws olive branches, exit prospects warm, early investment returns can be up to 100 times.
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Emerging ecological evolution: infrastructure improvement, rapid development of technology, shifting from attention to service users, and the rise of the next batch of unicorns. Want to get a high valuation? The founder still needs to improve the unit’s economic efficiency.
Vietnamese venture capitalists have every reason to be gratified because they have been able to benefit from the companies they invest in.
According to data provided by Cento Ventures and ESP Capital, the number of exits from emerging technology companies rose from three in 2017 to 14 in 2018. In 2018, investors gained a total of $250 million through the exit, including a $103 million IPO. In 2017, the total amount of exit transactions was only $41 million.
In the first half of 2019 alone, 10 technology companies have withdrawn.
As of now, most of the country’s exits have been made through mergers and acquisitions (in the form of sales and acquisitions), and the size of a single M&A transaction is approximately $20 million.
Vy Le, the general partner of ESP Capital, said, “Although the data is not surprising, we have withdrawn from the market and the number of exits is increasing. This provides an inspiring prospect for new funds to enter the market.” /p>
Exit the foreground and warm up
500 Startups Vietnam’s GP Eddie Thai said in the initial development of the local technology industry, “There is no high valuation company in our country (Vietnam), I think this is mainly due to the current ecological environment. decided”.
He mentioned that Vietnam’s exit volume accounted for a total increase in Southeast Asia’s the proportion has increased, from 2010-22% in 013 rose to 18% in 2014-2015. Although the proportion of the past few years has not been thoroughly investigated, given the overall development momentum of the capital market and the fact that Vietnamese start-ups have gradually produced products that can penetrate the regional market, he is confident in the future.
On a larger scale, Kinmen Ventures released its Southeast Asia exit report this month Forecast, between 2023 and 2025, at least 700 start-ups are expected to exit.
Regional unicorn companies will play a major role in the future exit, and they will strengthen their position through acquisitions, increased corporate investment, and more aggressive cooperation with global private equity firms.
In addition, experts also pointed out that more and more foreign Southeast Asian players have discovered the huge business opportunities hidden in Vietnam, and the Vietnamese market has opened its doors to them.
Last year, Indonesian unicorn company Traveloka acquired the travel booking platform MyTour, Southeast Asia’s “super app” Grab helped South Korea’s Access Ventures and Vietnam’s local Phoenix Holding family office to exit the e-wallet startup Moca.
Grab recently also invested $500 million in Vietnamese companies, especially for local startups.
In terms of corporate venture capital, large group companies have been considering increasing investment in start-ups. The largest corporate venture capital fund comes from Vietnam’s real estate, technology and retail giant Vingroup. It is worth 100 million US dollars.
Linh Thai, head of Vingroup Ventures, told investors at a recent closed-door meeting, “We are integrating the company into Vingroup to help them validate their technology and promote their growth. We are also concerned about those who can help. We are digital companies.”
“If we invest in a company, we can also be its first big customer. It’s not just a question of money. We appear on this company’s customer list and bring value to it,” She added.
Technology companies FPT Corporation, IT and telecommunications company CMC, telecom giant Viettel and commercial banks VPBank and other companies with venture capital business have also made heavy investments in the technology industry.
On the other hand, from Private equity stocks The more active funds in the region, such as Polaris Group, TA Associates and Huaping Investment, have injected the first huge sum of money into Vietnam’s technology industry.
Before private equity and venture capital massive intervention, Goldman Sachs and Standard Chartered PE have invested in financial technology company M-Service. After Affirma Capital completes its management buyout of Standard Chartered’s direct investment , it is likely to seek an exit opportunity for the old portfolio.
“Bits and atoms will always be combined, and private investors may be hurting themselves by not wanting to enter the technology space,” said Thai of 500 Startups.
Where is Vietnam VC? Southeast Asia Market Snapshot: Overview of Vietnam VC, starting with the first VC in 2004
Industry experts said that although the exit indicators such as refined return multiples and internal rate of return are not disclosed, the overall return is profitable. Eddy Hong, founder and CEO of South Korean investment company Nextrans, said that early investment returns can be up to 100 times, while late returns may be less than 10 times.
Example: According to local media reports, VinaCapital DFJ invested about 24.7 billion VND (US$1.18 million) in Yeah1 in 2008. VinaCapital DFJ eventually withdrew from Yeah1 for $100 million in transaction value, which was 85 times in 10 years. Sea Limited acquired an 82% stake in “Vietnamese Public Comment” Foody for $64 million, and the last time Cyberagent Capital sold the company, the value of the transaction was only 156 billion VND (US$6.7 million).
A list of exit companies in Vietnam’s technology industry
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Data from DealStreetAsia’s transaction tracking record and Kinmen Ventures’ Bamboo report
Eco-assisted valuation
Shared office space operator Nam Do, the co-founder of UPGen, said in 2015 that Vietnam lacks an ecosystem. He believes that the technology industry has not yet received support from multiple stakeholders, whether from the government or from investors.
Today, his shared office space company has raised funds through private equity and venture debt investors.
Vingroup Ventures’ Linh Thai also laments, “The change is too big. 10 years ago, it took longer to load a YouTube video than it actually was.”
Khanh Tran, a partner at VinaCapital Ventures, added that in addition to infrastructure improvements, the Vietnamese market tech is growing rapidly, creating new business investment models for investors .
” Startups are now in contact with corporate customers and can engage in dialogue with policy makers. This is something we didn’t have before.”
From the perspective of overseas investors, Eddy Hong, founder and CEO of South Korean investment company Nextrans, said that Vietnamese entrepreneurs have strong learning ability and are good at O2O business model. Many companies he invests in can achieve 20% monthly growth.
Dzung Nguyen, an analyst with his Vietnamese counterpart and Cyberagent Capital, said that the quality of local entrepreneurs has improved and has shifted from focusing on traffic to being service-centric.
Two years ago, it was difficult to reach a large transaction in the Vietnamese technology industry. However, according to the Cento-ESP report, a new wave of Vietnamese start-ups has started to raise $50 million to $100 million in financing since 2018.
This is only the first step. In the next few years, more Vietnamese companies will reach a valuation of 500 million or even 1 billion US dollars.
“Towards the World” or “Going Home”, “hardcore” Vietnamese unicorn evolution: Vietnamese entrepreneurial hot, unicorn loading…
The spring of the unicorn is here?
QR code payment company VNPAY recently made a large sum of money from Softbank and GIC. Although the company’s valuation has not been officially announced, VNPAY may have become the second unicorn in Vietnam after the online game operator VNG Corporation. .
Ep Capital’s Le said: “Our next unicorn company will have more money.”
In addition, the next batch of unicorns the time required for the rise is also shorter. It took nine years for Tiki to grow from a book-selling startup in a garage to “Vietnamese Amazon.” But today’s startups need to reach this level in just four or five years, Le said.
She believes, “If we have more unicorns, we can release positive signals to later investors.”
Because Vietnam has a financing gap of $20 million, the pace of financing for the start-ups in the country is slower than the overall level in Southeast Asia.
At the same time, investors must also strictly follow the valuation. But “Is the valuation at each stage consistent with the risk return at the time?” asked Eddie Thai of 500 Startups. “We pay close attention to the economic benefits of the unit. Although the unit economic benefits of the company are not necessarily eye-catching when we invest, the founder should be improving the economic benefits of the unitThoughts.”
Finally, in the eyes of local venture capital firms, valuations are not just a number, but more about whether startups have the ability to solve a large number of existing problems. Experts believe that Vietnam’s next big technology companies will come from the e-commerce, financial technology, logistics, healthcare and tourism industries, as well as companies that can create regional legends.
Focus on unit economics: India exit prospects: low growth in burning money , IPO winds look profitable
Translation | Hu Mengqi @熊猫译社
Edit | Pan Shen@出海
图 | Photos
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