Following the global trend, Vietnam’s urban tech sector also received large interest from foreign investors, who have helped tech-driven services like ride-sharing, food delivery apps and co-working to quickly infiltrate the daily lives of the country’s city dwellers.
According to Vinay Goel, Chief Digital Product Officer of American services and investment management firm Jones Lang LaSalle (JLL), venture capitalists have been pouring record amounts of investment into the urban tech sector.
Global investment in urban tech totaled more than US$75 billion between 2016 and 2018, more than what was spent on traditional sectors like biopharma, according to C.B. Insights. In the United States, 45 percent of all venture capital went to urban tech-related companies in the three year period, the data shows.
With global populations flooding into urban centers amid a technology boom, the pace of investment in the urban-tech sector is unlikely to relent anytime soon.
“It makes sense that urban technology is commanding so much interest from investors,” Goel said.
And Vietnam is also catching up fast with its regional peers in the trend, due to a young, dynamic, tech-savvy, entrepreneurial population, Stephen Wyatt, country head of JLL Vietnam, said.
“There is no better place to witness the growing demand from technology firms and co-working operators than Vietnam. We have seen a dramatic increase in demand from technology firms and co-working/flexible working operators over the past 3 years and anticipate this will be one of the key trends over the next 5 years,” Stephen said.
Top 3 segments
Mobility solutions, such as ride-sharing platforms and delivery service apps, are the hottest area of major investment, accounting for 61 percent of the global urban tech investment.
In the Vietnamese market, ride-sharing platforms have also seen the presence of more foreign investors. The competition in the US$1.7 billion market has recently heated with the participation of Indonesia’s Go-Jek.
With its US$500 million expansion plan into Southeast Asian countries, Go-Jek has recently entered the Vietnamese market with many shocking promotion programs to attract both passengers and drivers.
Under the overheated competition from the newcomer, Grab has recently also forced to roll out counter-measures to gain market shares, announcing to increasingly offer new promotions for both customers and drivers using its services.
Behind ride-sharing platforms, food delivery service apps have ranked second in attracting investment of the urban tech sector. Many foreign investors have so far poured significantly in Vietnam’s US$33 billion food delivery service market.
The local food delivery service market has two best names – Delivery Now, and Vietnammm.com. Delivery Now is a product of Foody Corporation under Singapore-based internet firm Sea LTD, while Vietnammm.com is a subsidiary of Takeaway.com, one of the world’s largest online food ordering websites based in the Netherlands.
Co-working is another investor hit of the urban-tech sector, coming in third after food delivery services for capturing the most investor interest.
Driven by Vietnam’s large millennial population, co-working spaces are on the rise in Hanoi and Ho Chi Minh City, with the participation of major international players.
The world’s largest co-working space operator WeWork, valued at US$20 billion, will likely make competition in the local market grow fiercer if it decides to launch its own co-working spaces in Vietnam.
According to the latest report by real estate services provider Savills Vietnam, 43 co-working spaces have been opened in Hanoi and 15 in Ho Chi Minh City since early 2014. The growing market includes foreign operators like Regus (UK), Hive (Hong Kong), CEO Suite (South Korea), and Kloud (Singapore).