The first half of 2023 has seen a remarkable drop in Vietnam FinTech funding, with total funding falling 67 percent year on year to a mere $6.2 million from $17.9 million a year ago, Tracxn Technologies Ltd said on Friday.

The software as a service (SaaS)-based market intelligence platform said in its “FinTech – Vietnam Half-Yearly Funding Report – H1 2023” that this also represents a staggering 97 percent decrease compared with the $201 million recorded in the same period in 2022.

According to Tracxn, the FinTech sector in Vietnam has experienced a significant downturn in funding throughout 2023, largely attributed to the lingering effects of the funding winter and the prevailing global macroeconomic uncertainty.

A notable factor contributing to the decline is the absence of late-stage funding rounds.

It said the FinTech space in Vietnam has witnessed a complete absence of late-stage funding throughout 2022 and 2023.

Among the funding rounds that did occur, early-stage investments constituted the majority, contributing $5.1 million to the total funding in the first half of 2023.

However, this amount reflects a steep 97 percent decrease compared with the substantial $195 million raised during the first half of 2022.

Furthermore, the early-stage funding for the first half of 2023 is 32 percent lower than the $7.5 million secured in the latter half of 2022.

Seed-stage funding also saw a considerable reduction, amounting to only $1.1 million in the first half of 2023.

This marks an 82 percent decrease compared with the $6 million raised during the same period in 2022, and an 89 percent decrease compared with the $10.4 million secured in the latter half of 2022.

Analyzing the quarter-on-quarter funding, the difference is evident.

The first quarter of 2023 recorded total funding of $5.1 million, signifying a 76 percent decrease from the $21.2 million secured in the first quarter of 2022.

In the second quarter of 2023, funding experienced a staggering 99 percent drop, plummeting from $180 million in the second quarter of 2022 to just $1.1 million in the second quarter of 2023.

According to Tracxn, the FinTech sector in Vietnam experienced only a single funding round exceeding $100 million during the first half of 2022. Since then, no funding rounds have surpassed this milestone.

Furthermore, the sector has not produced any unicorns, nor witnessed any acquisitions or initial public offerings (IPOs) within the past two years, spanning from 2022 to the present date.

Hanoi is the sole city that has managed to secure funding for the FinTech sector during the first half of 2023 in Vietnam.

Key investors that have played a pivotal role in shaping the FinTech landscape in Vietnam over the past two years include CIE IIITH, Y Combinator, WeFounder Circle, Integra Partners, and Genting Ventures.

Notably, CIE IIITH, Y Combinator, and WeFounder Circle have been significant players in the seed-stage investment domain.

Meanwhile, Integra Partners and Genting Ventures have emerged as prominent investors in early-stage funding rounds.

While the above challenges have impacted the country’s startup funding landscape, Tracxn said that experts remain optimistic about the sector’s rebound as the global economy stabilizes.

It said over the past decades, Vietnam’s economy has experienced substantial growth, resulting in a significant increase in per capita income, which has multiplied by 3.6 times between 2002 and 2021.

The country’s economy is projected to grow at a rate of 6.3 percent in 2023, further emphasizing its potential for continued expansion.

It is also noted that the Vietnamese government is actively contributing to the growth of the FinTech sector by spearheading the National Digital Transformation Program.

This ambitious initiative aims to achieve significant milestones, including transitioning 50 percent of banking operations online, providing 50 percent of the population with digital bank accounts, and facilitating 70 percent of transactions through digital channels.

Despite the challenging market conditions, Tracxn said the convergence of rising income levels, substantial digital economy growth, and proactive government interventions establish a robust foundation for the FinTech sector’s long-term growth prospects.

As the global economic landscape gradually stabilizes and the Vietnamese government’s digital transformation efforts continue to bear fruit, it expects a positive trajectory for the FinTech sector in Vietnam in the long term.

Tracxn: Vietnam’s tech startup ecosystem sees 82 percent plunge in funding