The optimal development path for startups in Vietnam at the moment is to join conglomerates, such as via merger & acquisition (M&A) deals, instead of striving for initial public offering (IPO), said Erik Duong, founder of Web3 X, an investment fund and incubator specializing in Web3 and Blockchain startups.
Erik told TNGlobal that Vietnam’s current economic strategy is building “national champions,” similar to South Korea’s chaebol model. Those “national champions” can utilize their advantages to dominate the market, leaving little room for startups.
As a result, instead of building a startup and exiting the startup to gain benefits, such as via IPO, entrepreneurs in Vietnam should strive to “sell” or “merge” their startups into conglomerates. They should targets big companies currently lacking the operation that the their startups can complement, Erik added.
Conglomerates in Vietnam now have to grow “fast” so their optimal choice is to acquire businesses in necessary operation, instead of building up new operation themselves, which can be slow pace, Erik highlighted.
The executive noted an example of the collaboration between Base.vn, a Vietnamese business management platform, and FPT, a leading tech company. FPT itself tried to replicate Base.vn’s model, but its development was lackluster versus Base.vn, and eventually Base.vn was merged into FPT in 2021 following an investment of FPT into Base.vn.
Giang Trinh, Vietnam Country Director at Founder Institute (Global Accelerator) said that Vietnam’s tech leading technology firm, VNG Group JSC (VNG), withdrew its IPO plan in the United States in 2024.
He noted that the decision by VNG—widely regarded as one of Vietnam’s most promising IPO candidates—highlights the challenges of startup exits in the country, describing them as “very difficult”, he told TNGlobal at an event in Hanoi.
In early April, the Vietnamese government issued Resolution 86/NQ-CP on national strategy on innovation startups. Until 2030, the target is to establish at least five million businesses, including 10,000 innovation startups and at least five innovation startups valued at $1 billion each. The value of the venture capital market can reach $1.5 billion.
For 2045, the target is at least 100 innovation startups valued at $100 million each and the venture capital market can reach $10 billion.
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