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Comments (0) Fintech news, Global trends, Hotnews, Vietnam

Number of Vietnamese deals dropped in 2016, but were worth a whole lot more

By Kevin McSpadden for e27,

After an explosion in the number of deals in 2015, the Vietnamese ecosystem regressed to the mean in 2016. But, other data supports overall positive growth, continuing a trend that has made Vietnam the darling “up-and-coming ecosystem” in Southeast Asia.

A report by the Vietnamese accelerator Topica Founder’s Institute broke down the 2016 trends and happenings within the country’s startup ecosystem. The entire deck is above and e27 highlighted the key trends below.

Vietnam’s dealflow 

For clarity, in this article the term ‘deals’ also refers to M&A activity and is not just fundraising. 

According to the report, Vietnam’s startup economy is in the midst of a healthy, upwards trajectory.

Overall, Vietnam saw a 34 per cent drop in the number of deals between 2015 and 2016 (from 67 to 50). However, this appears to be a regression to the mean rather than a concerning dip.

The amount of deals Vietnam saw in 2012, 2013 and 2014 was  24, 25 and 28 respectively. So, 67 the next year seems like an outlier number. 50 deals in 2016 is more in line with a growing ecosystem, rather than the exponential jump of 2015.

In these deals, total transaction volume was US$205 million, a 49.6 per cent boost from US$137 in 2015. It was driven largely by fintech, which saw US$129 million in dealflow as an industry.

Of the 50 deals, 40 of them were worth less than US$5 million with the majority (19) falling in the US$1 million to US$5 million range.

As with all ecosystems in Southeast Asia, the deals were mostly early-stage funding rounds as 70 per cent would fall into the Series A or Seed-stage categories. 30 per cent of deals were Seed and 40 per cent were Series A rounds.

Angel investing was a unpopular form of financing in 2016, with only 4 per cent of dealflow qualifying as an Angel Round. Only 12 per cent of deals were above Series A rounds — split as 8 per cent Series B and 4 per cent Series C.

The remaining 14 per cent were M&A deals.

Foreign investors outperformed local funds in terms of deal size, with UTC Investments (Korea) leading the pack after a US$33.8 million acquisition of VNPT E-pay.

CyberAgent (Japan) and Mekong Capital (Vietnam) were the most active investors in 2016, inking three deals each.

Fintech startups raised the most money, e-commerce sector had the most deals

Fintech reigned supreme in Vietnam. The industry raised US$129.1 million despite ranking second in the total number of deals.

E-commerce was the most active sector with 12 deals in 2016 — but it also only raised US$34.7 million — 27 per cent of the amount raised in the fintech sector.

The second fastest growing sector after fintech was edtech – raising US$20 million in 6 deals.

Mediatech saw a serious slowdown after raising US$4 million in 4 deals (as compared to US$15 million in 15 deals in 2015). However, the acquisiton of BIG CAT Entertainment by Asia Innovations Group was a notable exit in the sector.

Assuming Vietnam maintains its momentum, data from 2016 paints a very positive picture for the Vietnamese startup ecosystem moving into 2017.

Appeared at e27

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