Southeast Asia 'Startup Golden Triangle' of Vietnam-Singapore-Indonesia Sparks Region's Next Wave of Growth; Golden Gate Ventures Doubles Down on Vietnam with Two Offices

Rising consumer class,educated workforce and surge in post-pandemic digital demand set tone of Vietnam's golden decade ahead

HANOI,Vietnam,May 31,2022 --Golden Gate Ventures,a venture capital fund founded by Silicon Valley natives and based in Southeast Asia for over a decade,was joined by the Vietnam National Innovation Centre (NIC) and founders of leading Vietnamese startups to announce the opening of 2 new Golden Gate Ventures offices in Ho Chi Minh City and Hanoi. The group discussed opportunities in the SEA 'Startup Golden Triangle' of Vietnam,Singapore and Indonesia – and its influence on the region's next wave of growth.

Earlier this month Golden Gate Ventures' founding partner,Vinnie Lauria,settled in Ho Chi Minh City with his family to open the firms' new Vietnam offices. Today he signed anMoU (Memorandum of Understanding) today with the Vietnam National Innovation Centre to cement a long-term partnership to help Vietnam grow its startup ecosystem and support Vietnamese entrepreneurship. The MoU sees Golden Gate Ventures bringing investments into the market,fostering the exchange and growth of new ideas and innovations,and as a catalyzing force to help Vietnamese startups build regional businesses. Golden Gate Ventures now has offices across Singapore,Vietnam and Indonesia – mirroring the SEA 'Startup Golden Triangle'.

"We began our plans to establish offices in Vietnam in 2019 when Golden Gate Ventures co-hosted the very first Vietnam Venture Summit to help accelerate the growth of Vietnam's significance in the 'Startup Golden Triangle'. Despite the pandemic,we were committed to get boots on the ground and make our efforts truly local. We spent the last year working around COVID-19 restrictions so my family and I could move to Vietnam,understand and appreciate local culture,and ensure senior leadership was on the ground. We are very excited to be here," said Vinnie Lauria,Founding Partner at Golden Gate Ventures,who has since relocated to Vietnam.

Vietnam's Time to Shine

Following a tremendous decade of growth,the global investment community starts to pay more attention to Southeast Asia . Golden Gate Ventures has been firmly established in Southeast Asia for over 10 years with offices today across Singapore,Vietnam and Indonesia – mirroring the SEA 'Startup Golden Triangle' and is uniquely positioned to serve the region.

Vietnam is rising to the top to join the ranks of Singapore and Indonesia as another jewel of the region marked bya record high of USD1.4 billion Vietnamese startups in 2021[1],1.6 times higher than the previous record of US$874 million in 2019.

"2021 was a very strong year for Vietnamese startups,netting our highest-ever investment of US$1.4 billion,and newly established enterprises in the first four months of 2022 have increased by 31.9% from two years ago. This coupled with the positive momentum of foreign investment,greater recognition of Vietnam's potential across the startup ecosystem,and Vietnamese startups reaching a new level of sophistication,we are expecting investments to double in the next three years," said Mr Vu Quoc Huy,Director at National Innovation Centre in Vietnam,a unit of the Ministry of Planning and Investment.

While Vietnam has been on the radar of founders and investors in the last decade,the next few years is where attention to this market is going to truly pay off because of the confluence of its rising consumer class,young and educated workforce,and accelerated digital demand post-pandemic.

Domestic consumption is forecast to increase at a rate of 20% per year[2]. In fact,the country looks set to be a significant driver of Asia's consumption story over the next decade,adding 36 million more to its consumer class. Its middle-class population is believed to be the fastest growing in Southeast Asia,and estimated to comprise about 40 per cent of the total population today,up from a mere 10 per cent in 2000. By 2030,this figure could reach 75 per cent[3].

Vietnam's young and educated workforce is another draw,with 70 per cent of the population under 35 of its population of over 98 million[4],and a literacy rate of about 95.4% – amongst the highest in Asia[5].

A third factor contributing to Vietnam's potential is the rising post-pandemic digital demand. Vietnam added 8 million new digital consumers,with 55% of them coming from non-metro areas between the start of the pandemic and the first half of 2021. Vietnam's 2021 Internet economy GMV was forecast at US$21 billion – a 31% YoY surge that was underpinned by a 53% growth in e-commerce. Looking ahead to 2025,the overall Internet economy will likely reach US$57 billion in value,growing at a 29% CAGR[6].

"In the next decade,we expect to see Vietnam grow at a rate that we have never experienced before. We are at the perfect position of having extremely high internet penetration,a very strong domestic market,founders with innovative ideas that can scale beyond Vietnam,and partners that are helping to grow Vietnam's startup ecosystem here on the ground in Vietnam. The Vietnam government has invested in the last decade to put many pillars in place – from education support to infrastructure build-out and ecosystem development. These investments are now paying off– it is clear from the tremendous investor interest and extremely high startup activity," said Kim Ngoc Thanh Nga,Head of Ecosystem Development Department,Vietnam National Innovation Center.

Singapore Continues its HQ Stronghold

Singapore continues to hold its position as the region's go-to market as a regional and global HQ,and the pandemic has further reinforced this positioning,with investment appetite remaining strong in digital services that surged as a result of COVID-19. In spite of its size,Singapore internet economy continues to grow at breakneck pace: the gross merchandise value (GMV) of its internet economy was estimated at US$15 billion in 2021,up a whopping 35% year-on-year[7]. This surge is underpinned by a 45% growth in e-commerce,e-grocery,and digital financial services. With 97% of Internet users also being digital service consumers,the city-state's penetration rate remains highest in the region. Its Internet economy will likely reach US$27 billion by 2025,growing at a 16% CAGR[8].

Indonesia's Tremendous Domestic Market and Strong Localised Innovation

Indonesia is the third arm of the SEA 'Startup Golden Triangle' not only because it is the region's most populous country and largest economy,but the pandemic has fuelled digital growth and localised innovation unlike any the country has seen before. Between the start of the pandemic and up till the first half of 2021,Indonesia has seen 21 million new digital consumers,of which 72% are from non-metro areas – a sign of accelerating penetration in the region's largest market. The country's Internet economy GMV was estimated at US$70 billion last year – surging 49% YoY,underpinned by a 52% growth in e-commerce. Looking ahead to 2025,the overall Internet economy will likely reach US$146 billion in value,growing at a 20% CAGR. As one of the most vibrant digital services markets in the region,Indonesia continues to attract strong global capital inflows,with the e-commerce,fintech,healthtech and edtech segments grabbing the spotlight[9].

"SEA has always been a region of tremendous opportunity,but scaling business models has been a challenge for many because of the unique dynamic of each market. Our research into the region's largest unicorns has shown that putting the unique strengths of Singapore,Indonesia and Vietnam together creates a winning combination to help them innovate and grow at lightspeed,Founding Partner at Golden Gate Ventures.

"As a VC turned entrepreneur,I understand that the key markets of Southeast Asia are Vietnam,Singapore,and Indonesia,the 'startup golden triangle'. Founders in Vietnam need to understand business models that work in these markets in order to build the best product and to scale regionally," said Trung Huynh,Founder of Mio,a social commerce platform for groceries and fresh produce that recently bagged its Series A funding and beating out traditional commerce models.

Startup Golden Triangle Opportunity Areas

Although healthtech,fintech and supply chain analytics continue to be big bets in this 'Startup Golden Triangle',gaming and D2C are key sectors to watch. Southeast Asia,one of the fastest-growing games markets in the world,generates the largest revenues in the global gaming sector,with Indonesia,Vietnam and Singapore leading the pack for mobile gaming in the region. The region is expected to register a CAGR of 8.5% over the forecast period of 2022 to 2027,driven by a rapidly rising online population,increased mobile device usage,and with almost two-thirds of the gaming population engaged in eSports[10].Gaming is a particularly huge opportunity area in Vietnam,with revenues of almost $530 million in 2020,double those of 2015[11].

D2C brands have nearly tripled the capital raised from investors in 20,which amounted to over US$2 billion across 105 deals. The segment had witnessed a dip in 2020 when it raised US$735 million,while in 2019,the total came close toUS$1.5 billionthrough 120 deals,according to Venture Intelligence data.

For more information on the SEA Startup Golden Triangle,please refer to a brief prepared by Golden Gate Ventures available on this link: https://ggv.sg/startup-golden-triangle

[1]https://doventures.vc/assets/uploads/reports/download/vietnam-innovation-and-tech-investment-report-fy2021-1652760480.pdf

[2]https://www.vietnam-briefing.com/news/introduction-vietnams-export-import-industries.html/?hilite=%27vietnam%27

[3]https://business.inquirer.net/336515/vietnam-expected-to-add-36-million-middle-class-people-in-next-decade

[4]https://www.vietnam-briefing.com/news/how-to-invest-in-vietnams-edtech-industry.html/

[5]https://www.statista.com/topics/6226/education-in-vietnam/

[6] e-Conomy SEA 2021 - Vietnam (google.com)

[7] https://www.statista.com/statistics/1247740/singapore-gmv-of-the-internet-economy/

[8]e-Conomy SEA 2021 - Vietnam (google.com)

[9] e-Conomy SEA 2021 - Vietnam (google.com)

[10]https://www.mordorintelligence.com/industry-reports/southeast-asia-gaming-market

[11]https://vir.com.vn/social-restrictions-spur-gaming-popularity-88414.html#:~:text=As%20a%20result%2C%20the%20gaming,Ministry%20of%20Planning%20and%20Investment.

About Golden Gate Ventures

Golden Gate Ventures is a VC fund in Southeast Asia (SEA) founded by Silicon Valley natives. Since 2011,Golden Gate Ventures has launched four funds and invested in over 60 companies. The firm focuses on investing in the rising consumer internet class in Southeast Asia. Breakout companies include Carousell (mobile classifieds),CodaPay (mobile payments),Appota (Vietnam mobile publishing platform),Loship (last mile logistics),Mio (social commerce),Carro (Auto Marketplace),Vui (early wage access) and Xendit (Payment Processing).

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