Editor’s note: In recent years, Vietnam was celebrated as Southeast Asia’s rising star—a high-growth market fueled by a young, mobile-first population, strong developer talent, and rapid consumer adoption. Today, that story is shifting from potential to maturity.
Over the past few weeks, TNGlobal published an exclusive series of conversations with venture capitalists, ecosystem builders, startups founders. Whether you are an investor looking for the next growth driver in ASEAN, a founder scaling in the region, or an industry observer, this series offers a grounded, ground-level look into Vietnam’s digital economy.
Vietnam’s M&A market is booming — but technology is barely in it. The country logged more than $1 billion in M&A deals in June alone, yet only three tech deals worth a combined $0.6 million, under 1 percent of the total. The gap has become the defining question for the country’s digital economy.
In a separate interview with TNGlobal, Quest Ventures senior analyst Linh Ha read it as both friction and youth: founders still pricing themselves at peak-era valuations, buyers fixated on immediate cash flow, tangled cross-border structures and a shortage of audit-ready startups, atop an ecosystem where early-stage rounds and acqui-hires are only now laying the groundwork for bigger deals. She sees exits shifting toward strategic acquisitions and secondary-market sales rather than the elusive IPO.
Meanwhile, in this interview with TNGlobal, Alex Phan, an investor and Co-Founder of startup incubator XYZ Foundation, takes the diagnosis deeper: Vietnam’s legal framework has begun running ahead of its market, collateral-bound banks leave intangible tech firms stranded, and founders are chasing the wrong prize. An IPO that was never the only exit and rarely the right first one.
“From my own observation, standing in the position of someone who supports and champions Vietnam’s startup journey, I believe the recent policies are excellent and necessary,” he said. “I see things at this moment moving much faster than in the previous term.“
The legal framework in Vietnam usually presents two realities. First, real life evolves faster than the legal framework in many areas.
”But in this term, I believe the Government has recognized the problem and in many cases, has let the legal framework run slightly ahead, even leading the way to shape the market,” he added.
“Let me give an example. About 26 years ago, when I worked in the securities industry, Vietnam’s economy was developing but had not yet met all the conditions of a market-economy institution. Securities are, by nature, an inevitable product of a developed capitalist economy, whereas Vietnam at the time was not yet a fully formed commodity economy,” he said.
So why was a stock market still able to take shape? Because it is a highly effective tool for mobilizing capital for economic development.
“Back then, Vietnam’s legal system moved slightly ahead of its curve to create that framework, and today we have the Vietnamese stock market,” he added.
According to Phan, Vietnamese policymakers understand that the new growth model can hardly follow the old one. Vietnam cannot keep relying on natural resources, or on traditional industries that are labor-intensive and capital-intensive. Perhaps Vietnam has to become knowledge-intensive, drawing more on brainpower.
“I believe Vietnam is refining its policies. For example, the formation of financial centers in Ho Chi Minh City and Danang, which include a sandbox mechanism for experimentation. I believe the legal regulations are increasingly numerous and increasingly practical. The goal is for it to be supportive, or at least to reduce the entry costs and compliance costs for startups,” he said.
By nature, a startup is much like a small and medium-sized enterprise, like a very young child, so it must be nurtured, encouraged, and even given more latitude: through tax exemption policies and simpler procedures. Another support is to accept that mistakes will be made and learnt from, with no attribution of liability for a startup’s failures, he noted.
These things are very necessary for an ecosystem and a legal framework that encourages, supports, and promotes the development of startups in general.
Why does the tech sector struggle to attract capital?
Based on Phan’s observation, businesses in general today have a constant, continuous need for capital, not just technology firms, because Vietnam’s economy is developing.
“So why do we see so few tech companies going public or raising capital via IPO? My observation is that there must be enough companies that qualify for an IPO, to raise capital on the stock market or the public market,” he explained.
This stems from two reasons, according to him. The first comes from the market. Vietnam’s economy is growing but unevenly across sectors, and there is a divergence in capital allocation. Large sectors like industry, real estate, and services absorb too much of society’s capital, creating a “crowding out” effect. When the large enterprises absorb a lot of capital, the remaining businesses, including SMEs and startups, have fewer opportunities to access it. That creates unequal competition.
The second reason lies in the nature of tech firms themselves. Most tech companies aren’t profitable from the start and their products are intangible assets, not easy to evaluate. Meanwhile, the capital providers are usually banks and banks only look at existing, tangible assets.
If you want to borrow, you need collateral, usually real estate. But if you say “I have a software system,” the bank can’t value it and will mostly turn you down. Banks have no mechanism to encourage startups to access capital.
This reflects the immaturity of Vietnam’s banking and financial sector. Especially after the Covid pandemic, the global financial and investment community became very demanding. Simply surviving Covid was already hard for a business; for a tech company, gaining customers, revenue, and profit is even harder.
So both external and internal factors are unfavorable, he said.
Meanwhile, Vietnam’s banks and financial institutions are not ready to finance businesses that have no profit yet.
That concept is very different from developed markets. Many large companies, even chronically loss-making ones like Uber, have never turned a profit, yet why are they still worth billions of USD?
The expectations of the stock market and of IPO deals lie in the future. The most important thing is that people buy a company’s growth prospects, like Tesla and SpaceX, but not its past or present. They don’t look at how much real estate or tangible assets a company holds. That is a very large difference in mindset.
“I believe this also shows that Vietnam’s stock market and financial market in general are not yet strongly developed, and that is a bottleneck making it hard for tech companies to raise capital in Vietnam recently,” he said, adding that he still has faith in the capital market growth.
There’s no need to be too pessimistic, but it will take time for venture investors to emerge, he opined.
IPO is not the only path
An Initial Public Offering (IPO) is not the only way to raise capital. Nowadays, especially for tech companies, there are many ways to access capital; an IPO is just one of them.
“If you look at the US market, not everyone can get onto Nasdaq the stock market for newer tech companies, where the listing conditions are lower than the New York Stock Exchange,” he explained. Likewise, China has two markets: the main board in Shanghai, and Shenzhen for companies with a technology orientation and lower listing conditions to encourage tech companies.
Tech companies do not necessarily have to make an IPO to gain capital. New classes of capital providers have formed, including: venture investors; corporate venture: some enterprises have begun setting aside their own capital to invest in relatively risky tech firms; public funds: for instance the state’s science-and-technology funds along with the public-private partnership model.
Finally, there is another form quietly emerging: the family office. This is the form used by families, in essence, millionaire and billionaire families who have accumulated wealth over time and now have to find places to invest. Family offices abroad, especially in Asia such as Singapore, Japan, South Korea, Hong Kong, are very developed. In Vietnam, I observe that some families have also set up family-office-type companies and must look for investment opportunities.
In short, there are more options than just an IPO. And with IPOs, frankly, Vietnam is still unclear for tech companies, for two reasons. First, on the supply side: there aren’t yet many tech companies. Second, on the institutional side: there is not yet a dedicated listing board (a secondary board) for tech companies.
That isn’t ready, so tech companies need to look to other options to raise capital.
“I see the opportunity for Vietnam’s tech startups not necessarily lying in an IPO. Worldwide, too, not every company must IPO to gain money. There are many other forms, such as a trade sale: once you have a good product and service, a competitor may buy you outright; or build to sell: you found a company, and a competitor, realizing that letting this company grow would create a potential rival, decides to buy it,” he said.
There is mergers and acquisitions (M&A), together with the concepts of family office, venture capital, and corporate venture. Only when a company is large enough and wants to build a lasting company (build to last), meaningful for the long term, while also realizing an exit strategy for shareholders, does the IPO option come into play.
So Vietnamese startups should fully believe in and focus on: whether the product is good enough, whether we’re attractive enough, whether we can prove ourselves to investors. Don’t worry about whether you can IPO because that matters less than the question: can your product actually sell?
The first revenue, the first customer, is extremely important. That is the substance, and investors only look at the substance. They don’t look too much at a pitch deck with very beautiful, very attractive slides, but at whether there is real revenue. It all comes back to “back to basics.”
As for the general trend, capital still flows into the mega trends. The biggest trends in the market today are AI and AI applications, robotics and automation, digital assets, blockchain, and new biotechnology trends. Vietnam is also a link in that ecosystem, not outside the trend.
So does Vietnam have core technology yet? We hear about it here and there but don’t see much. I believe this needs time. Everything has to go through a stage of accumulation before it can develop.
According to Phan, a startup is no different from a child: it must be nurtured. There have to be suitable legal policies, there have to be diligent investors like people who add a little water each day, and we have to build the young people’s confidence that they should go for it, should make mistakes. Making mistakes is not something terrible or negative. Society’s mindset is changing.
“I still have great faith that Vietnam knows all the major technology trends, and the young people have grasped them fairly quickly. But let them have time,” he said.
The government also understands very well that the drivers of economic growth today are no longer what they were. “We must change the growth model, we can’t keep relying on capital-intensive industries or labor-intensive industries,” he concluded.