500 Startups, the U.S.-led VC firm, is continuing its push into Southeast Asia after it hired two partners in Vietnam, a signal that it may be about to launch a local fund for startups the country.
There are plenty of reasons why Vietnam is attractive for investors right now. With a population of 90 million, more than half of whom are aged under 30, it is a mobile-first market with huge potential for technology and internet businesses. (A recent New York Times story looked at the rise of entrepreneurs and startups there.) 500 Startups is best known for its Silicon Valley accelerator program but has been active in Asia — and other parts of the world — for a few years, and it recently extended its ‘500 Durians’ fund for Southeast Asia by a further $5 million.
In Vietnam, it has hired Binh Tran, formerly CTO and co-founder of Klout, and Eddie Thai, a local startup advisor who spent time working with Fortune 500 companies in the U.S., to act as its eyes and ears.
Khailee Ng, 500 Startup’s Southeast Asia-based Managing Partner, offered no comment when we asked if 500 Startups is planning a dedicated fund in Vietnam, but it almost certainly is given the launch of its $10 million fund for Thailand — ‘500 Tuktuks’ — earlier this year. That Thai microfund began with the hiring of two local venture partners, too.
500 Startups — which has made over 1,000 investments across the world, including the U.S., Africa, India and beyond — has already completed three deals in Vietnam, and Ng said the plan is to do 20 more deals over the next year. (Again, another sign of an imminent local fund.)
Highlighting the high use of mobile internet versus desktop and the young population, Ng told TechCrunch that Vietnam has “all the right pieces, but not enough VCs.”
Media has been rife with speculation that 500 Startups is raising a fund in Vietnam, and, referencing its fund in Thailand, it appears that the firm’s approach to Southeast Asia is two-sided.
Local, country-specific micro-funds provide early-stage funding to get initial ideas and startups off the ground — 500 Tuktuks will cut checks at a $75,000 average and is expected to cover nearly 70 deals — and follow-on funding for businesses that gain traction. 500 Durians, the fund that Ng leads which covers regional companies, provides the next step in the funding process for those ready to expand beyond their domestic markets. The firm also runs a post-funding program based out of Malaysia, which launched last month.
It’s an interesting but long-tailed strategy in Southeast Asia, a region that — to date — has been dominated by investors from Singapore and Japan who typically prefer to invest at post-seed stages where the signal-noise ratio is lower and the potential payout from an exit is higher.