Da Nang: Southeast Asia’s Next Startup Hub
According to a new JLL report, Da Nang is one of the fastest emerging startup cities in Southeast Asia. Other cities in the region include Penang in Malaysia, Chiang Mai in Thailand, and Bali and Bandung in Indonesia.
Driven by low cost, a robust engineering talent pool, and government support, the port city is known for attracting established players in the tech field but increasingly is being sought out by startups looking for a foothold or base of operations in Southeast Asia.
The city hosted Startup Fair 2016 last year to highlight its capabilities and foster the startup ecosystem. The event attracted over 500 participants, including policymakers, investors, domestic and international partners, as well as local businesses and entrepreneurs.
In 2016, the city also established the Danang Entrepreneurship Support Company, a US$1.3 million incubator to run incubation programs. The incubator aims to support startups through its investors and partner with local universities for skill development programs.
Investments on the rise
With increased attention and strong fundamentals, Vietnamese startups have started to attract international funding such as MoMo e-wallet, which received US$28 million from Standard Chartered Private Equity (SCPE) and Goldman Sachs.
Other firms such as F88 and GotIt also received funding worth US$10 million and US$9.1 million respectively. Also, in early 2016, 500 Startups, an early-stage venture fund, set up a US$10 million fund to invest in Vietnamese startup projects. Foreign investors have outperformed local investors in terms of deal value.
The most attractive sectors in the startup community continue to be commerce, education, and fintech. In 2016, fintech startups witnessed deals worth US$129 million, while e-commerce deals amounted to US$34.7 million. Edtech or educational technology witnessed deals worth US$20 million.
Notable government initiatives
Government-supported programs such as the “National Programme to Support Innovative Startup Ecosystem in Vietnam by the year 2025” aims to create an ecosystem to support startups. They aim to provide early-stage funding to startups with high-growth potential and are expected to have supported 2,000 start-up projects and 600 start-up enterprises by 2025.
With the fast-growing digital community, government-supported programs, and the availability of a large engineering workforce, investors and tech firms are gradually been drawn towards Vietnam and away from traditional markets such as India and China.