Download - VN SECO EP report: Ecosystem
The purpose of this report is to help the Vietnam Startup Community and SECO EP
Partners to achieve greater economic impact. The first part of this report is a Macro analysis that is applicable to all partners. The
The feedback is based on my personal experience as co-founder of Startup Weekend and Up Global as well as some of the latest ele
Feel free to share.
1. COMPARATIVE ANALYSIS
We can benchmark any ecosystem by comparing it with its
surrounding startup ecosystems. We’re using a geographic,
population and GDP referential to analyze Vietnam and South East
Asia. The data is gathered using angel.co. We’re defining startups
here as ventures with high growth potential who have been seeking
venture funding.
v
COUNTRY VIETNAM MALAYSIA MYANMAR SINGAPORE THAILAND INDONESIA PHILIPPINES
POPULATION
(millions) 89.71 29.72 53.26 5.399 67.01 249.9 98.39
GDP/Capita
(USD)1910 10538 1200 55182 5778.98 3475 2765.08
# Startups
on angel.co226 636 37 1781 483 901 555
Startup Density
(#Startup / pop)2.52 21.40 0.69 329.88 7.21 3.61 5.64
DATA ANALYSIS
Vietnam is behind its surrounding startup ecosystems.
The Philippines is a comparable country by population,
demonstrating that Vietnam should be able to produce 2.2 times
more startups.
INTERPRETATION
TALENT POOL:
Graduating students per year : 400,000 (source)
Qualitatively, we observed talented students who were eager to
learn. A pattern emerged: Students who speak English fluently
perform better at launching successful startups. Not speaking
English at a sufficient level is a handicap to raise capital and to
compete at an international level. It is equally a handicap to find a
job in large corporations: unemployment among students is rising.
The 2014 EF English Proficiency Index confirmed this observation
listing Vietnam among the group of countries which have “low
proficiency” in English.
SUCCESS PATTERNS
Consistently, all success stories started with entrepreneurs
who studied abroad. Overall this is coherent with our
previous observations. The amount of capital needed to
bootstrap in Vietnam is low (around $10k - $30k). Most of
the successful businesses / founders we met invested in
simple local businesses or copy-cats they scaled locally.
They usually had a financial background and partnered
with Japanese, Korean or Singaporean investors.
According to Brad Feld, one of the founder of Techstars,
ecosystems need to develop a 20+ years vision at a
community level. Startup ecosystems are by nature
grassroots.
It is important to help the local entrepreneurial leaders.
We share this advice, and recommend a long term vision
versus a race to create startup Unicorns.
WHAT MAKES A GREAT
ECOSYSTEM?
2. HIGH LEVEL MAPPING
We used the Entrepreneur’s Journey (EJ) as a base for the Ecosystem mapping.
HEALTHY STARTUP
ECOSYSTEM
DISCOVER
[ 1,000+ Startups]
[ 10,000+ Founders]
VIETNAM STARTUP
ECOSYSTEM
[WEAKNESSES]
Lack the volume of startups needed (goal is 1000+)
Lack of local capital to support scale
(mainly shifting to Singapore)
Vietnam is not capturing its champions! Leading
to a lack of success stories and mentors
There is a lack of educational structure
like GA / Galvanize in the ecosystem
Startup Weekends and other
community events exist, but need to increase
Few people are informed about the
potential of becoming an entrepreneur
National programs needed
Typically a good ecosystem has a solid base, and then builds on the top of it.
Vietnam as a country needs to focus on the base of its ecosystem.
The low English proficiency is weakening access to best practices and external
investors. Currently, Vietnam is developing an upside down startup
ecosystem, where VC and accelerators are numerous and compete for a low
volume of startups.
As a comparison, Singapore has 130x more startups per capita! Neither
Silicon Valley nor Singapore should be copied. Instead we recommend a long
term vision of 10 to 20 years to build: focusing on English and computer
science education; leveraging grassroots- and entrepreneur-led programs.
VIETNAM ECOSYSTEM
HarmfulHelpful
GROWING ECONOMY
LOW COST
CENTRAL TO THE REGION
TECH TALENT
LOW STARTUP DENSITY
LACK OF ENTREPRENEURIAL “LEADERS”
LOW LEVEL OF ENGLISH PROFICIENCY
LACK OF M&A / CAPITAL EXITS
SLOW INTERNET / NO LTE / LACK OF GOOD INFRA
LACK OF EXPERIENCED INVESTORS
ATTRACTIVE / FOREIGN TALENT
DIASPORA
ONE OF THE FASTEST GROWING
ECONOMY IN THE REGION
LARGE MARKET (90M+)
GROWING ECOSYSTEM (NEW SPACE)
JAPANESE / SINGAPOREAN / US /
AND AUSTRALIAN BUSINESS ANGELS
Strengths Weaknesses
Opportunities Threats
BRAIN DRAIN
MOVING TOO SLOW
STRENGTHS
Vietnam’s strength relies on the quality and volume of its
tech talent: developing at low cost ($500-$1000 per month).
The country is also a hub for Asia and has attractive and
active cities.
WEAKNESSES
The Vietnamese startup ecosystem is new (3 years ago
there was just one co-working space)! It is moving fast, but
it is important to focus on building a solid base of talent and
infrastructure currently lacking. Mainly broader access to
fast internet and English speaking talent.
THREATS
The country is already facing a brain drain. The opportunity
is to stay connected with the talent who left. The main threat
here is to move too slowly on important structural changes
needed and described as weaknesses.
OPPORTUNITIES
Clearly there is an opportunity to attract top talent to the
region to leverage and boost the local ecosystem. Digital
travelers could be a target but the slow network
infrastructure in more remote areas is an issue. As for larger
hubs, like HCMC and Hanoi, the main opportunity lies in
leveraging foreign capital and diaspora talent.
PARTNER ANALYSIS
SECO EP Partners are concentrated around the Founder and Startup steps
of the ecosystem. As expected by the Macro analysis, they face a “startup
dealflow” issue.
Currently Vietnam is lacking a solid base. We will generally recommend to our
partners to explore the earliest stages to truly support the future of their
ecosystem.
CONCLUSION
Vietnam needs to focus on high volume startup education; starting with
a better english base. Subsequently attracting foreign investors and
startup talents.
Most of the partners have the challenge of attracting startups
that could return large exits. This is not sustainable and difficult at the
current stage of the ecosystem.
By focusing on the base and attracting successful mentors and digital
nomads, as well as leveraging the “vn diaspora,” VN will be able to do
great things. But all our partners need to build a 5 to 10 year vision …
BIBLIOGRAPHY / SOURCES
http://castleventure.com/wp-content/uploads/2014/04/SW-White-Paper-Entrepreneurs-
http://www.paulgraham.com
http://www.startupschool.org
https://www.udacity.com/course/how-to-build-a-startup--ep245