Vietnam has secured the fourth position in 2023 based on year-to-date (YTD) funding, marking the lowest funding year for the region since 2019, Tracxn said Tuesday.

Tracxn said in its “Geo Annual Report: Vietnam Tech 2023” that the Vietnamese tech startup ecosystem has raised a total of $142 million in funding year to date, reflecting a drop of 73 percent and 91 percent compared with the funds raised in the same period in 2022 and 2021, respectively.

It said that Southeast Asia (SEA) region itself has experienced a significant decline in funding, making 2023 the least funded year in the past five years.

This downturn is attributed to increased interest rates, a global economic slowdown, and geopolitical tensions, resulting in a cautious approach from investors and a subsequent slowdown in investment activities, it added.

According to the report, the substantial decrease in funding in Vietnam is particularly noticeable in late-stage funding, plummeting from $30 million in 2022 to a mere $3 million year to date, a massive 90 percent fall.

Meanwhile, the overall seed-stage funds year to data stands at $10.4 million.

The seed-stage funding has dropped by 84 percent and 82 percent year to date compared to 2022 and 2021, respectively.

Early-stage funding also witnessed a 70 percent drop to $129 million year to date compared to $431 million raised in the same period in 2022.

Thuocsi, a pharmaceutical e-commerce app, secured $51.5 million in the Series B round, marking the highest funding round in the Vietnamese Tech space in 2023.

It is noted that the region did not witness any $100 million+ rounds in 2023.

Likewise, there were no initial public offerings (IPOs) or unicorns in the Vietnamese tech sector in 2023.

This year witnessed only three acquisitions, a 40 percent decline compared to five in 2022. The acquisition of Symplefy by GoLogiq stands out as a major acquisition in 2023.

According to the report, healthtech, fintech, and enterprise applications are the leading sectors in terms of funding year to date.

Healthtech sector witnessed positive growth, increasing by 35 percent to $53.5 million.

The fintech sector, on the other hand, secured a total funding of $35.3 million year to date, a drop of 84 percent compared to the funds raised in the previous year.

Gimo, an employee payment solution for enterprises has raised a total of $17 million through two Series A rounds, contributing a major chunk of funds in this sector

The report also showed Ho Chi Minh City emerged as the highest-funded city in 2023 with a total funding of $97 million, followed by Hanoi which gathered $45 million.

Nextrans, Vietnam Silicon Valley, and VSV Capital rank as the overall top investors.

Despite these challenges, Tracxn said positive prospects emerge with the United States plans to diversify its manufacturing dependency on China through the “China plus one” strategy.

It noted that in October 2023 alone, the SEA region received over twice the monthly average of Foreign Direct Investment (FDI), primarily directed towards establishing manufacturing units in Vietnam.

“Despite the challenges posed by the funding landscape the combination of government initiatives and increased investments is expected to bolster economic activity, positioning the country for future growth,” said Tracxn.

Tracxn: SEA tech startups continue to see a downward trend as funding falls 65 percent in 2023