Venture Capital and Technology Industries in Vietnam

Transcription

1 Venture Capital and Technology Industries in Vietnam Henry Nguyen Managing General Partner Hanoi Office: Vincom City Tower B, 15th Floor 191 Ba Trieu Street Hai Ba Trung District Hanoi, Vietnam Tel: Fax: Ho Chi Minh City Office: Sunwah Tower, 11th Floor 115 Nguyen Hue Street District 1 Ho Chi Minh City, Vietnam Tel: Fax:

2 Is Vietnam This?

3 Or this?

4 Vietnam: A Quick Profile Macroeconomic Indicators: 2007E GDP Growth: 9.0%, 2006 Consumer Spending Growth: 8.4% Unique Characteristics: ~70% Under 35yrs, ~50% Under 25yrs; Most Optimistic Country in Asia (ACNielsen); Labor Force: 47 million Age Structure Ethnic Breakdown 12 Other 12% Thai 2% Thai 2% Others 12% Kinh (Viet) 86% Kinh (Viet) 86% Vietnam Internet Usage (mm) Mobile Usage (mm) Population: 85 million Government: Socialist State Literacy: 90.3% Languages: Vietnamese (official), English (increasingly favored as second language) Source: CIA World Factbook, May 2007; VNNIC, Dec 2006; MPT, Dec 2006

5 Vietnam: Striking Characteristics 1. Young (70% < 35yrs), large, and fast growing consumer population 2. High literacy rate (94%), including adoption of English as a 2 nd language of choice 3. High, steady GDP growth 4. Increasing levels of foreign direct investment 5. Emergence of a strong middle-class consumer segment 6. Low historical private equity investment 7. Rapidly growing capital markets environment 8. High rates of technology growth and adoption (mobile and internet)

6 Vietnam GDP Growth: Standing Out Among Peers Vietnam leading the pack in GDP growth as compared to its ASEAN neighbors and tracking the China and India growth machines GDP Growth European Union Australia Japan United States Taiwan Israel South Korea Thailand Philippines Indonesia SEA Malaysia Singapore Vietnam India China 0.0% 3.0% 6.0% 9.0% 12.0% 2006 GDP Growth Source: ASEAN Countries: ASEAN Secretariat, March 2007; All other countries: CIA World Factbook, May 2007

7 Vietnam: A Stock Market on a Tear The Vietnam Stock Market been on a sharp rise the last 6 months with significant amounts of foreign capital coming into the market

8 but a market still with a lot of headroom 2006 Asia Stock Exchange Market Capitalization and as a Multiple of GDP ($USD Billion) 1, , x 2006 Market Capitalization (USD$ Billion) 1, Hong Kong (HKEx) Southeast Asia Aggregate Singapore (SES) Malaysia (Bursa) Philippines (PSE) T hailand (SET) 9.2 Vietnam (VSE) 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x As Multiple of GDP (PPP) Source: All exchange information from the relevant exchange. GDP information from the CIA World Fact Book, May 2007 Despite over $6B coming into the private and public equities market in Vietnam, there still is some head room as compared to its peers

9 Global Top 20 Internet Countries 2007 Japan USA Korea Vietna m China India 50M GDP / Capita

10 Vietnam and Developing Countries Vietnam 2009? Vietnam 2007 Vietnam 2005 China 2007 India M GDP / Capita

11 Vietnam Technology Market Internet Penetration: 17.2mm users in 2006 Up from 11.5mm users in 2005, a 50% y/y increase 20% Internet Penetration For ages 15-19: 82% (Feb. 2006) For ages 20-24: 74% (Feb. 2006) Millions of Users % 40.0% 30.0% 20.0% 10.0% 0 0.0% Mobile Phone Penetration: 12.2mm mobile phone users in 2006 Up from 8.4mm users in 2005, a 45% y/y increase 14% mobile phone penetration Three major carriers hold 95% of the market Mobifone initiated equitization process Vinaphone, the nation s largest mobile phone carrier, will open for public ownership in 2008 Millions of Users Internet Users Internet Penetration (%) % 40.0% 30.0% 20.0% 10.0% 0 0.0% Source: VNNIC, Ministry of Post & Telematics Mobile Phone Users Mobile Penetration 2010

12 Information Technology Overview The Information Technology (IT) market in SEA is largely driven from increasing Internet usage. Of the SEA countries, Singapore has the greatest internet penetration, at projected 80% in In addition, the World Economic Forum ranked Singapore third in Network Readiness in , ahead of the USA (#7), Japan (#14), and South Korea (#19). Populous laggards like Vietnam, The Philippines, Thailand, and Indonesia present incredible upside in the next few years Internet Penetration and Internet Usage in SEA Internet Usage in Emerging Countries in SEA 100% % 80.0% % 59.1% % % 25.2% 20% 21.1% 18.9% % 6.5% Singapore M alaysia Vietnam Philippines Thailand SEA Indonesia Indonesia Thailand Vietnam Phillippines Source: IDC, June and Dec 2006; For Vietnam: VNNIC, Dec 2006

13 Telecommunications Overview The telecommunications sector is commonly underdeveloped in emerging markets like Southeast Asia. Due to a dearth of traditional wire lines, Southeast Asia has emerged as a growing market for mobile access. Outside of subscriber revenues, there exists a large growing market for mobile value added services, such as ringtone and wallpaper downloads and mobile gaming. IDC reported $USD 81.4 billion in mobile services in 2005 in Asia-Pacific ex-japan (APEJ), a 17.6% increase from Mobile Penetration and Mobile Usage in SEA Mobile Usage in Emerging Countries in SEA 100% 94.2% % 80% % 57.4% 52.1% % 40.3% 31.3% % 21.3% % Singapore M alaysia Thailand Philippines SEA Indonesia Vietnam Vietnam Thailand P hilippines Indonesia Source: Gartner Dataquest Forecast Mobile Connections , May 2006; For Vietnam, MPT Dec 2006

14 Internet and Mobile Markets While the absolute number of Internet and mobile users in SEA is less than China and higher than India, the penetration numbers (as a % of population) are higher than both China and India Penetration %* Internet Mobile China 12% 34% India 3% 10% SEA 15% 38% * measured as porportion of internet users divided by population Internet Users in China, India & SEA Mobile Users in China, India, & SEA China India SE Asia Source: 2004, IDC Internet Market 04-08; 2005, 2005 emarketer A-P Wireless; 2005 Mobile Conf Beijing,;2005 World Bank Country Tables

15 Regional Trends While SEA is a very diverse region, IDGV SEA has identified ten trends that make investments in the region scaleable, transferable across borders, and highly lucrative: 1. Expansion of a young middle-class and increasingly conspicuous consumption 2. Explosive growth and transformation of the media sector in SEA 3. Acceleration of leap-frog technologies and services 4. Growth of online and mobile content, services, and advertising 5. Expansion of multinational companies into SEA creates favorable exit opportunities 6. Increasing government liberalization will promote a better business environment 7. Increasing regional government support of TMT and life sciences 8. Migration of business process outsourcing (BPO) from India to the Philippines and Vietnam 9. Replication of proven business models and technologies 10. Emerging center of excellence for life sciences and healthcare services

16 Case Study: The Team: Combination of IDG Ventures Entrepreneur-in-Residence and Vietnamese Financial Professionals and Gaming Enthusiasts Swordsman Online: #1 Online Game in Vietnam (60% market share) Internet Population of Vietnam: ~18 million Registered VinaGame: ~9.5 million (in less than 24 months) Peak Simultaneous Players: 320,000 User Growth: Between 10-15% per month (compounded) Source: Vietnam Post and Telecommunications Group (VNPT), VinaGame

17 IDG Ventures SEA Overview Leading Early-Stage Venture Capital Fund in the Region: $100 million fund committed in 2003 in Vietnam $200 million fund closing in September 2007 Local Partners with strong personal networks and domain expertise Strong local brand that is highly credible with entrepreneurs and government officials alike Critical Partner in IDG Ventures: IDG Ventures has over $1.4 billion of committed capital under management Global footprint in US (San Francisco, Boston), Europe, and Asia (China, Vietnam) Each fund is operated as an autonomous unit local decision making and local economics IDG Ventures is NOT a corporate fund Lead LP in Fund I: International Data Group (IDG): World s largest IT Media Company Publishes ~300 magazines in over 85 countries IDC Market Research a whole owned subsidiary of IDG Deal sourcing through world s leading IT events, such as LinuxWorld

18 The IDG Platform: A Differentiated Asset As a member of the IDG Platform, IDGV SEA has access to: Over 300 Leading Publications like PC World, CIO, Mac World The premier IT Research and Statistics company, IDC Over 160 Trade shows and Expos across 35 countries The IDG Platform reaches more than 120 million technology buyers across 85 countries, representing 95% of worldwide IT spending

19 IDG Ventures: Global Venture Capital Track Record Over $1.4 billion USD under management Portfolio of over 250 companies over the last 15 years Five funds spread across two continents, four countries, and over ten cities: Boston, San Francisco, China, Vietnam, India The IDG Ventures network has invested in some of the world s premier IT companies, creating over $20 billion USD in value: IPO - NASDAQ IPO - NASDAQ IPO - NASDAQ IPO - NASDAQ M&A Adobe IPO - NASDAQ M&A - Microsoft IPO - NASDAQ IPO - NASDAQ M&A - Yahoo