‘World crisis could be an opportunity for Vietnamese Fintech startups’

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In the context that the Vietnamese market has received the attention of many famous Fintechs in the world and domestic banks have made strong changes, Fintech startups face many opportunities and challenges to develop. . To better understand the Fintech market in Vietnam besides the opportunities and challenges of startups, Mr. Bui Thanh Do – Founding Partner & CEO of ThinkZone Ventures, the largest investment fund with domestic resources in Vietnam shared:

Mr. Bui Thanh Do – Founding Partner & CEO of ThinkZone Ventures, the largest domestic resource fund in Vietnam. Image: NVCC

According to statistics, Fintech investment capital in ASEAN increased sharply, capital in the first 9 months of 2021 was three times higher than in 2020 and reached 3.5 billion USD. Compared to other countries in the region, where is Vietnam’s Fintech standing?

– In recent years, the Vietnamese startup market, especially the Fintech field, is growing strongly. There are many investment funds looking for representatives in the Vietnamese market or opening branch offices. Total investment capital into Vietnam increased, the growth rate was high compared to other countries in the region.

Looking at the Fintech market in Vietnam, some types of investment are mainly being made in payment, lending, credit services,… Vietnam currently has 4 unicorn businesses, two of which are: Momo and VNLife operate in the field of financial technology, especially payment.

According to some statistics, online payment is growing rapidly at an annual rate of 80% and is forecast to double by 2026. Vietnam is expected to be the fastest growing market in Southeast Asia. At the same time, the improved payment field will help many other activities such as online business, online education… develop.

Besides, the development of new types of Fintech in Vietnam such as Buy now pay later, Earn Wage Access (EWA) with flexible salary payment are widely popular. This creates a really exciting Fintech market, attracting the attention of many investment flows and also poses challenges in state management.

– So what makes the Fintech market attractive in Vietnam, sir?

– Firstly, the Vietnamese market has a population of nearly 100 million people, in which the number of people of working age and the young population accounts for a large proportion. With a young population, easy to adapt to many new types of services, Fintechs will be easy to test.

Second, the rate of Vietnamese people using the Internet is very high among the top countries in the region and in the world. Vietnam is one of the 20 countries with the highest number of Internet users in the world according to the General Statistics Office. In addition, the average Vietnamese people use the Internet more than 6 hours/day. These factors facilitate the Fintech boom.

In addition, Vietnam is also a country with a high percentage of phone users. All of the above factors create the potential for the development of Fintech services and the attractiveness of investment in this type of investment.

– With great potential for Fintech development, in your opinion, what opportunities do Fintech startups in Vietnam have to develop in this field?

– Crisis in the world and trade sanctions create risks of money flow arbitrage. In the domestic market, if businesses can use domestic capital in credit business, it will bring great advantages.

The market crisis also created many other consumer needs. Consumers tend to seek new types of financial services. From user data, startups can provide solutions that precisely meet the needs and tastes of customers.

The retail and consumer market in Vietnam is still developing strongly, at the same time, the Internet economy in our country is forecasted to grow up to 11 times by 2030, ranking first in terms of market share. speed in Southeast Asia. With that opportunity, Fintechs in Vietnam still have a fertile ground to innovate with revolutionary services. Importantly, founders must dare to think, dare to do and really understand the game, not build short-term, unsustainable models.

– Besides opportunities, what are the challenges that Fintech startups in Vietnam have to face?

– Different Fintech models will face different challenges during this period. For example, for credit service companies, which use capital from abroad to provide financial credit packages, the risk faced is the difference in foreign currency borrowing rates leading to increased capital costs. At the same time, for these companies, if they cannot control bad debts, it will be very dangerous.

The challenge for startups is to create a revolutionary, accessible solution that brings value to users. For a successful startup, companies must simultaneously solve problems in customer classification, business models, bad debt settlement, technology application in optimizing solutions, processes, etc.

In addition, another challenge is that in Vietnam, user data is quite fragmented. If this challenge can be improved, in the future there will be more breakthrough solutions from startups. Because the founder’s gene is always trying 24/7 to find ways to optimize the company’s products and businesses to solve the market’s requirements.

– In Vietnam, recent years have witnessed the strong landing of world-famous Fintechs such as Alipay, Wechat Pay, Amazon Pay… In addition, domestic banks have also promoted digitization. In your opinion, will this limit the development of Fintech startups in Vietnam?

– The world-famous Fintech, unicorn companies when entering Vietnam will bring challenges to startups when they have strong capital. However, the problem is not that bringing a successful model abroad into Vietnam will achieve similar successes. Large enterprises when investing in the Vietnamese market will also face certain barriers in terms of foreign investment structure, foreign ownership and legal corridor in Vietnam.

To create a suitable Fintech model in Vietnam, domestic startups have the advantage of understanding the market. This is a great advantage, businesses need to take advantage and develop quickly to maintain that advantage.

Regarding traditional banks, in fact, banks in Vietnam are changing rapidly, but in order to deploy Fintech types, it is also necessary to solve many challenges.

For banks, their current apparatus has not been established to really solve the needs of small-scale loans and consumer loans. At the same time, the running costs of a large organization will often be more cumbersome. When the cost of approaching customers is high, the time to disburse and complete the procedures to customers will be long and unable to meet the needs of the new segment.

For young customers, what they need is a quick, easy and convenient solution. Media banks may have a harder time addressing this need than startups. Therefore, Fintech startups still have certain advantages if they really work hard to learn and have new product development philosophies that can solve the market’s requirements.

– 70% of Fintech businesses in Vietnam are startups, so how can a Fintech startup make you decide to invest?

– The first thing in a startup I am interested in is whether their model is really viable to develop in the market. I always have to ask the question, what are the opportunities and challenges for the model and product to develop.

In some recent deals, ThinkZone still invests in models that have begun to show signs of slowing down and going down in the world. Many people are skeptical of this decision, however, ThinkZone does not invest in trends and does not invest in a startup that just copies unicorns around the world. ThinkZone is interested in startups where the founders really understand the challenges they have to solve.

On the social aspect, ThinkZone appreciates businesses that solve the urgent needs of customers and bring positive financial solutions to society. One of the definitions of success with the business we invest in is sustainability, rapid growth and positive value, not just growth and profits. We do not invest in companies that make money on the “negative” factor they create for society.

ThinkZone CEO will participate in the workshop “Starting Fintech: Growth Hacking Secrets” with leading speakers in the technology field.

– So what is your advice to help Fintech startups conquer investment funds and start successful startups in this field?

– First, to successfully raise capital, businesses must understand the “taste” of investors. Each investment fund will have different investment strategies and definitions of success. In addition, businesses need to know clearly why this investment fund is right for them, what benefits will cooperation with the fund bring to the business besides investment money.

Second, businesses when calling for investment need to be honest and understand the business model, be transparent in the numbers, because to find an investor for the long-term, it is necessary to have a certain understanding.

Third, it is necessary to show numbers that are committed to investors. During the two years of the pandemic, I have been impressed with the businesses invested by ThinkZone. The difficulty is that but they have never stopped, even, many businesses have achieved outstanding growth.

Don’t approach too many investors, startups should focus on products, businesses and customers. In fact, there are many startups that spend 3 to 6 months just raising capital and approaching investors. With such a long time, the founder will not have time to manage the company, unable to learn the wishes of customers to optimize his products.

In Vietnam today, there are many investment funds, so start-ups should focus on conquering the funds that are really suitable for their business from the segment and vision to be able to “close the deal” in a short time. short time. Startups should just focus on their business, the right investment funds will come by themselves.

Hong Thao