How corporate innovation in Vietnam is fledgling the B2B startup ecosystem
Zone Startups is contributing to Vietnam’s push to leverage its well-known software outsourcing industry into a fledging B2B startup ecosystem
Swiss EP’s partner organization Zone Startups is contributing to Vietnam’s push to leverage its well-known software outsourcing industry into a fledging B2B startup ecosystem, where corporate open innovation is put under the spotlight.
Vietnam has long been known as a prime destination for global companies’ software outsourcing, which benefits from the country’s pool of more than 400,000 highly-skilled IT engineers. The huge interest arising, first and foremost, from international firms boded well for the development of the Southeast Asian country’s B2B software startups, which is also the main focus of Swiss EP’s partner organization Zone Startups Vietnam since its inception in 2018.
Zone Startups Vietnam is an extension of the cross-border acceleration program originally run by Toronto Metropolitan University in Canada. Since its early days, the Vietnam accelerator has leveraged its extensive partnerships with both local and international companies such as VinaCapital, Talentnet, Unibrands, and TTG Holdings, to tap into the startup community in Ho Chi Minh City.
“These corporate trailblazers have partly directed our attention to develop the B2B startup market in Vietnam,” said Quynh Vo, Program Director of Zone Startups Vietnam, underlining the different focuses of Zone Startups offices across 9 countries including Japan, India, Korea, and the U.S. “Unlike the previous period in 2018, 2019, we have recently received more interest from companies which realize the Covid-19-induced radical changes in their operations and the importance of investing in corporate innovation from the inside out.”
Besides Zone Startups, its Vietnamese accelerator-cum-investor peers like VIISA and Thinkzone Ventures are also seen exerting huge efforts to involve, and in some cases, being inspired by, these pioneering corporations. VIISA was established in January 2017 by two large financial firms, including the venture capital arm of Vietnam’s largest private ICT company FPT Corporation. Earlier this year, ThinkZone also announced its $60 million fund II fully backed by local conglomerates such as Phu Thai Holdings Group and IPA Investments (the owner of VNDIRECT, Vietnam’s 2nd largest listed brokerage firm).
A push to involve more corporations
Not only the private sector, but the ecosystem is also witnessing an increasing push from the government to place corporate innovation activities at the center stage. The annual three-day national startup event Techfest Vietnam 2022 held in Binh Duong province this December had the theme of "Open Innovation-Open New Thinking”, involving a slew of large corporations such as VinGroup, Heiniken, Qualcomm, and Trung Nguyen Legend Group.
Speaking at the event’s press conference, Pham Hong Quat, General Director of the National Agency for Technology Entrepreneurship & Commercialization (NATEC), emphasized that Techfest aims to promote the development of a comprehensive open innovation ecosystem with three main pillars, namely the state, corporations, and impact startups.
Accordingly, instead of relying solely on internal knowledge, open innovation encourages the utilization of external resources from startups, universities and research institutions in solving enterprises’ challenges. These corporations are not only open to using startups’ quality technology products at more reasonable prices but are also inclined to help speed up the expansion of innovative solutions through their customer bases and business networks.
“We still need more case studies of how startup solutions can better support businesses as well as more knowledge sharing to educate the market on corporate innovation,” Quynh said. “These challenges remain, but can be solved with time.”
So far, as Zone Startups Vietnam has possessed a portfolio of 36 B2B software startups, including buy-now-pay-later service provider Fundiin, drag-and-drop design platform for advertisers LadiPage, and employee recognition software Bravo, Quynh plans to officially form a “basket” of startups’ technology solutions to offer to big corporations, together with the launch of digital transformation and industry-related programs to advise firms on their paths to innovate.
An opportunity for global exposure
Compared to decades of experience in developing B2B software from global vendors such as Oracle, SAP, or Microsoft, Vietnamese B2B software startups are still struggling to catch up and scale up globally, said Nguyen Quynh Anh, program manager at Swiss Entrepreneurship Program (Swiss EP) Vietnam. Vietnamese companies have been able to offer decently customized and one-off solutions internationally, but with models such as Software-as-a-Service, they are still in their infancy, she added.
“Even with advantages in considerable human resources and lower software development expenses, Vietnamese startups still have weaknesses in hyperlocal knowledge and languages, which hinder their ability to scale big overseas,” Quynh of Zone Startups stated.
As a result, from an initial request of Zone Startups Vietnam, SwissEP brought its Entrepreneur-in-Residence Patrick Collins to Vietnam, offering a global view of sales and business development to various B2B accelerator programs, including those from Zone Startups, BizCare, BKHoldings, and Lab2Market. Employing a data-driven approach in sales together with a focus on world-class customer support as the key driver, startups receiving Patrick’s consultation across the world have raised over 40 million euros over the past three years.
“Our programs have always been designed with a mixture of local and international experts in an effort to support our startups’ expansion plans,” Quynh said, highlighting the timely and suitable support of Swiss EP as a provider of international mentors and local ecosystem networks for Zone Startups in Vietnam.
During the pandemic, Quynh said that some startups registered even higher revenue from markets outside of Vietnam, which helped them reinforce financial strength amid unexpected and localized lockdowns. For example, taking advantage of the Zone Startups network in India, GoStream, an automated livestream platform targeting micro-enterprises and media agencies, has successfully forayed into the Indian and Pakistan markets since 2019 with growing sales. Other startups that are eyeing international markets can also receive “customized” and “1-on-1” support from the accelerator’s 9 offices globally to shorten procedures to establish a presence there.
“However, we always review the startups’ ability to survive in the domestic market first,” Quynh added. “Except for several special business models, I believe that it is important for startups to win first on their home turf with their own knowledge and language before venturing into broader overseas markets.”