Total funding into Vietnamese FinTech startups plunged 84 percent to $35.3 million in 2023, from $227 million in 2022, Tracxn Technologies Ltd. said on Thursday.

The data intelligence platform said in its “Tracxn Geo Annual Report: Vietnam FinTech 2023” that the Vietnam FinTech ecosystem is the third highest-funded startup ecosystem in the FinTech space in Southeast Asia (SEA) region in terms of overall funding till date.

According to the report, the FinTech sector in Vietnam secured funding worth $35.3 million in 2023 with only eight funding rounds, the least funded year since 2021.

It said the sector saw a massive decline of 84 percent in funding in 2023, compared with $227 million raised in 2022.

The funding slowdown can be attributed to the absence of late-stage funding rounds.

It is noted that no late-stage rounds were recorded in 2022 and 2023, as against $300 million in 2021.

Meanwhile, early-stage funding stood at $33.1 million in 2023, a plunge of 84 percent from $207 million raised in 2022.

Companies in this space attracted seed-stage investments worth $2.2 million in funding, a slump of 89 percent compared with the $20.7 million raised in 2022.

It is also noted that no $100 million+ rounds were observed in this space in 2023, as against one such round in 2022.

Further, no new unicorms emerged from the Vietnam Fintech sector in 2023.

According to the report, alternative lending, banking tech, and insurance information technology (IT) were the top-performing segments in this space in 2023.

Companies in the alternative lending space witnessed a total funding of $17.1 million in 2023, a 50 percent growth from $11.4 million raised in 2022.

The banking tech segment secured funding worth $10 million, which is a significant 50 percent drop from $20 million raised in 2022.

Funding in the insurance IT space stood at $6 million in 2023, compared with $2.5 million funding in 2022.

Infinity Capital, X21 Digital and Avstar are the most active investors in this space till date.

Y Combinator, Resolution Ventures, and ThinkZone were the top investors in seed-stage rounds in 2023, while Peak XV Partners, JAFCO Asia, and Patamar Capital were the most active early-stage investors.

Tracxn expects the Vietnam FinTech market to grow at a higher rate in the coming years.

“Its growing tech-savvy young population and digitalization are expected to accelerate growth in this region,” it said.

It also noted that the Vietnam government has supported development in this sector.

According to Tracxn, the government has launched the National Strategy on Digital Transformation which aims to increase the Digital economy share in the gross domestic product (GDP) to 20 percent by 2025.

It also noted the State Bank of Vietnam is developing a Sandbox environment where FinTech startups can test their novel products and it helps the govt to learn risks associated with new business models and thereby develop regulations that will motivate innovation.

Tracxn is a data intelligence platform for private market research, tracking 2.3 million entities through 2500+ feeds categorized across industries, sub-sectors, geographies, and networks globally.

Tracxn: Vietnam’s year-to-date funding falls to lowest since 2019