Encounters of innovators: tech-driven and tech-enabled Vietnamese startups [Part 3]
Although all businesses are likely to grow, the possibilities of scaling up among startups vary, based on its industries, growth stages, technology application capacity and founders’ management competency.
A Deloitte’s research in 2015 showed that the chances of a new enterprise to ascend as a scaleup were around 0.5%, which meant that only 1 out of 200 surviving new enterprises would become a scaleup. “Unicorns” made up the even smaller subset of scaleups.
“The transition from startup to scaleup involves constantly learning from today’s rapidly changing global environment,” affirmed Joe Haslam, Executive Director of the owner scaleup program at IE Business School.
VNG has been the first “unicorn” in Vietnam. Photo by Vietnamnet.
Pham Nam Long, founder and CEO of Vietnamese tech-driven startup Abivin, the 2019 Startup World Cup’s winner, recently refused to answer the question of “unicorn” possibility of his company.
“We are still at the iterative circle of building, measuring and learning to make bigger leaps”, he admitted, acknowledging that competing in technology advancements required serious calculated decisions on whether a company might make or break at this point.
Brant Cooper and Patrick Vlaskovits wrote another age-old lesson in their classic book “The lean entrepreneur” that even if a startup does have all the elements of a good business model, especially in tech-enabled companies, it does not mean that the business can grow big. Wefit, one of the top 10 startups of Techfest 2016’s national competition, was a prominent example of the fact that a “copycat” business model still fails.
The company surprisingly filed for bankruptcy this May, even though it followed the model of a successful scaleup in the U.S. — ClassPass, a listed New York-headquartered online fitness subscription platform company. The incident showed that Wefit’s pivot strategies derailed by inefficient management and its current business model was not suitable for scaling up within Vietnam.
“We could call it the first notorious scaleup failure of a third-generation startup in the country,” said Nguyen Viet An, Director of Frontier Technology Development Center at Hanoi’s Hoa Lac Hi-tech Park. “We should appreciate and embrace this failure,” he noted, underlining that the case drew on a lot of learnings, especially about pivot strategy management and the wrongly overfocusing on customer acquisition in tech-enabled companies.
COVID-19 was said to have accelerated Wefit’s bankruptcy. Photo by VnExpress/Dat Nguyen.
When a company scales up, it may increase returns but “triggers two new kinds of technological risks,” stated Nicolas Colin, Co-Founder and Director of European accelerator The Family, on his company’s website. He wrote that the infrastructure had to carry on speedily scaling business, and some technology had to be developed to process data and manage operations.
“We could not segregate good business models from technology advancements”, said Tran Tri Dung, Program Manager of Swiss Entrepreneurship Program in Hanoi and Central Region of Vietnam.
The line between tech-enabled and tech-driven is more and more blurry in scaleups. Tech giants like Google, Apple, and Amazon, have outgrown their startup notions and have diversified enough to be both tech-driven and tech-enabled.
VNG, the only “unicorn” of Vietnam, is a tech-enabled company with popular products like Zing MP3, Zalo, ZaloPay, competing directly with international giants such as Spotify, Facebook Messenger, or SamsungPay. The company recently announced that it has successfully developed the cloud computing technology owned by Vietnamese engineers to serve hundreds of millions of users.
“ Vietnam is still waiting for a next generation of scaleups and unicorns,” said Mandy Nguyen, Director of Ecosystem Development of Startup Vietnam Foundation (SVF) — the co-organizer of Techfest 2020’s startup competition. “We believe that making a playground for the meaningful encounters between tech-driven and innovative business model-oriented startups [tech-enabled] would benefit and accelerate the ecosystem into this scenario.”
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The preliminary round of the national startup competition is taking place from October 8 to November 8, divided into two groups of startups: tech-driven and innovative business model-oriented. The organizer would give the top 60 companies out of nearly 500 startups nationwide various training sessions and online pitching stages in front of international and domestic investors and experts. The final round will be held at the biggest annual event for Vietnamese startup community — Techfest 2020 on November 28 in Hanoi. The winner will be the representative of Vietnam to attend the Grand Finale of Startup World Cup 2021 in Silicon Valley, competing with more than 40 countries’ prominent startups worldwide for a $1 million investment prize.
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