Believing in the possibility of Vietnam as a startup hub may become a reality in 2025. According to the Global Startup Ecosystem Report (GSER) 2024, the country bounced back and rose by two spots in the global rankings, going from 58th to 56th. Ho Chi Minh ranked among the top 100 cities globally in sectors like fintech, edtech, eCommerce & retail, and transportation.

Vietnam tech startups making their mark include manufacturing companies like Inflow, iQuatCongNghiep.vn, Vulcan Augmetics, and Selex Motors. Inflow helps fashion brands source, track, and manage production, whereas iQuatCongNghiep.vn is an online industrial tools and equipment distributor. Vulcan Augmetics is a robotics prosthetics company, and Selex Motors produces electric vehicles and battery packs.

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So, what indicators point to the potential of Vietnam becoming a prominent startup hub in the Association of Southeast Asian Nations (ASEAN)?

Factors contributing to Vietnam’s startup ecosystem growth

According to the World Bank, Vietnam has solid foundations and has risen from an economic growth rate of 5% in 2023 to 6.1% in 2024. Experts believe the global demand and the restored consumer confidence will enable the country to achieve a projected GDP growth of 6.5% in 2025, thereby boosting its startup ecosystem. 

Here are some other factors to consider for startup hub growth:

  • Demographics: Vietnam has a tech-savvy and youthful population, with a median age of 33. The population stood at 99.19 million in January 2024, providing a large trade, innovation, and investment market. Internet penetration reached 79.1% of the total population, with 78.44 million online users. Furthermore, mobile use is high, totalling 168.5 million active cellular connections.
  • Rapid digitalisation and adoption: According to Intelligent CIO, Vietnam was the fastest-growing digital economy in ASEAN in 2023. Its rapid digitalisation, infrastructure enhancements, and adoption of technologies like 5G and artificial intelligence (AI) means the online economy will account for 20% of the country’s Gross Domestic Product (GDP) by 2025 and 30% by 2030.

Digital transformation is also vital for transitioning to a green economy. Southeast Asia is vulnerable to environmental impacts and greenhouse gas emissions (GHG). Thus, Vietnamese startups can find the solutions needed to decarbonise the nation and obtain renewable energy to power cities and industries.

  • Government initiatives and regulations: The Vietnamese government has introduced initiatives like the National Innovation Center (NIC) and startup-friendly regulations that support new companies and attract investors. National leaders also enacted Decision No: 844/QD-TTg to dedicate resources to the emerging business sector. Vietnam’s Ministry of Information and Communications also spearheaded the rollout of 5G technology to boost the startup landscape. Local and foreign investment

Venture capital (VC) firms are providing the funding needed to power the startup sector in Vietnam. Examples of the top investors in the country include VinaCapital Ventures, 500 Startups Vietnam, and Mekong Capital. Local and foreign direct investment (FDI) enables companies to scale, receive mentorship, and acquire expert employees. They can also afford to conduct research and development (R&D) to enhance their technologies and product offerings.

  • Innovation: The GSER Report 2024 notes that the Vietnamese government is accelerating innovation in the country through the NIC, operating under the Ministry of Planning and Investment. The Department of Science and Technology (DOST) continues testing policies and fostering growth in the Ho Chi Minh City, Hanoi, and Da Nang ecosystems. Some of the innovations having an impact include AI development and integration, blockchain technology and cryptocurrency, and the manufacture and use of electric vehicles (EVs).

Challenges Vietnam faces to become a significant startup hub 

While the factors above indicate that everything will be smooth sailing for Vietnam’s startup landscape, nothing could be further from reality. The country faces multiple issues that may hinder the ecosystem, including:

  • Infrastructure gaps: Tech development can strain the existing infrastructure. The government must invest more money in building new platforms, networks, systems, data centres, facilities, roadworks, cables, and more to deliver the framework needed for startups to thrive.
  • Funding winters: There have been funding winters in the region due to global economic storms that involve inflation and high interest rates. These headwinds are reducing investments in Vietnam and preventing startups from having enough money to hire the experts they need.
  • Green economy transition: ASEAN struggles with waste disposal and recycling. Vietnam tech startups can ensure they shift to a circular economy, which encourages maximising the use of energy and resources and disposing plastic and eWaste responsibly.

As 2025 approaches, we can see the clear potential of Vietnam as a startup hub for the future. According to the GSER Report 2024, the country currently holds the 5th position in the region. Nevertheless, stakeholders can do more to attract investors, support new businesses, and make the ecosystem more competitive in ASEAN.