On the radar
Vietnam’s green startups have been attracting a great deal of attention from various funds and investors.
Eleven projects that will help tackle climate change in Vietnam have been selected in the second cohort of Climate Finance Accelerator (CFA) Vietnam, according to an announcement from the British Embassy in January. Projects cover clean energy and energy transition, e-mobility, AFOLU (agriculture, forestry and other land uses), the circular economy, and waste management, and have the potential to benefit communities around the country. These projects are seeking a total of $436 million in funding.
The CFA is part of the UK Government’s efforts to help Vietnam meet the commitments made by Prime Minister Pham Minh Chinh at COP26 in Glasgow in 2021 and to offer support to implement the Vietnam Just Energy Transition Partnership (V-JETP) that was agreed upon in December 2022. CFA Vietnam is being implemented by PwC Vietnam.
Ms. Dinh Thi Quynh Van, Chairwoman of PwC Vietnam, said the existing landscape is favorable for low-carbon projects, coinciding with Vietnam’s net-zero commitments and ongoing regulatory improvements across sectors. “We are excited to observe the growing interest from investors in low-carbon projects in Vietnam and look forward to seeing more successful engagements between projects and potential investors,” she added.
DRAWING INVESTMENT
BenKon, a Vietnamese energy-saving tech startup, successfully raised $500,000 from the Increase-Together-Innovation Fund (ITI Fund) in 2023. Founded in 2020, BenKon has developed a patented system that is compatible with more than 99 per cent of air conditioner models on the market. Quick installation helps businesses collect data and apply AI to save energy and costs.
“BenKon has developed a unique solution that is difficult to imitate and has a positive economic and environmental impact,” said Ms. Kimmy Dang, Head of the Investment Department at the ITI Fund. “Investing in advanced technology development activities and applying useful solutions from BenKon has an extremely important role, demonstrating the consensus of relevant parties on the journey to realizing the government’s net-zero strategy by 2050.”
Elsewhere, Buyo, a startup tackling global plastic waste, raised pre-seed funding led by the Singapore-based Aldebaran Capital in 2023. The specific value of the deal has not been disclosed. After two years of research and development, Buyo raised $750,000 in investment from international venture capital funds and operates a pilot factory with a capacity of 10 tons a month in Ho Chi Minh City, which will expand to 100 tons a month this year.
Previously, sustainability startup Equo, which specializes in providing plasticfree and compostable solutions made from ingredients such as coffee, coconut, and sugarcane as an alternative to single-use plastics, successfully raised $1.3 million in a seed round. Electric motorbike startup Dat Bike, meanwhile, has announced it raised $8 million, led by Jungle Ventures and with the participation of GSR Ventures, Delivery Hero Ventures, Wavemaker Partners, and Innoven Capital, bringing its total fundraising to $16.5 million. The Antler Fund has invested $110,000 in early stage energy storage startup Altern , which is actively contributing to Vietnam’s net-zero emissions goal with innovative sand battery technology called Altern Air. It also received
sponsorship, without equity requirements, from Japan’s Wacom Group to help with the first patent of Altern Air.
While there are no accurate figures available, the Institute for Sustainable Development believes that capital flows into green startups in Vietnam are increasing rapidly. Through four startup support programs organized in the country since 2021, the Antler Fund has invested a total of more than $3 million, helping 31 successful startups including Buyo and Altern . The Vietnam Silicon Valley Capital Fund (VSV Capital) said it has invested in more than 80 startups since its establishment in Vietnam in 2014.
“Vietnam is an emerging market, so many startups are currently operating as social enterprises,” said Mr. Gibs Song, CEO of VSV Capital. “We are targeting green trends and opportunities in Vietnam, with a focus on transportation, renewable energy, and waste management.”
REQUIREMENTS FOR CAPITAL ACCESS
According to PwC’s “Global Investor Survey”, more than 75 per cent of investor respondents affirmed that they consider the potential to or make investment decisions in businesses already focusing on environmental, social, governance (ESG) criteria. The survey report also points out that green businesses and green startups are the focus and priority of investors, which means that projects and businesses not following ESG criteria will have difficulty accessing capital.
VinaCapital recently established the VinaCarbon impact investment fund, specializing in investing in companies and projects that can generate carbon credits. One carbon credit is the equivalent of one ton of greenhouse gas emissions reduced. “VinaCapital also requires that ESG standards are met, or capital will be gradually withdrawn,” Mr. Don Lam, CEO and founding shareholder of VinaCapital, was quoted as saying.
Similarly, Ms. Do Hong Hanh, CEO and Co-founder of Buyo, said that to successfully raise capital, green startups must meet five criteria: be addressing a significant problem for the community and society; possess groundbreaking technology easily commercialized and with long-term competitiveness; have personnel with the capacity to lead; boast capabilities in market size and commercialization; and have an ESG influence and impact.
“Previously, investment funds were not interested in sustainable startups,” said Ms. Marina Tran Vu, CEO and Founder of Equo. “Green startups are not yet attractive to investors because their profit margins or growth rates are significantly lower than tech startups,” she added.
Green startups face a host of other challenges. According to Ms. Hanh, Vietnam does not have an ecosystem or physical facilities to support and promote strengths in human resources. Outdated laboratories are not equipped with advanced equipment, and most are concentrated in State research facilities, and there is no policy to take advantage of social resources or share resources between the State and businesses. Links between State scientific research facilities and businesses to commercialize and market products are not overly common, yet models like this can be found overseas. Raising capital from investment funds is generally in the form of equity, which means providing shares to investors, so startups need to mobilize more loans to retain shares. Meanwhile, banks have preferential loan policies but interest rates remain high, approval procedures are complicated, and the conditions are many.
Mr. Hai said regulatory hurdles can be complex, often requiring navigation through a mix of local and national policies. “Securing consistent and adequate funding, especially in the early stages, remains a significant challenge,” he added. “Market resistance to new technologies and the need for consumer education about the benefits of green solutions are other common obstacles. Building a skilled workforce in green technologies and ensuring the adaptability and scalability of solutions in a diverse market are crucial for sustained growth.”
BELIEF IN THE FUTURE
Vietnam provides an environment conducive to green startups such as Altern due to a raft of factors. According to Mr. Ho Viet Hai, Co-founder of Altern, the country has shown a strong commitment to renewable energy and sustainability, which is supported by government policies and initiatives. Vietnam’s abundant natural resources, including potential in solar and wind energy, offer a great foundation for the development of green technology. Moreover, rising public awareness and demand for sustainable solutions create a market ready for green innovation. The country’s growing infrastructure and strategic geographic location also facilitate the testing, implementation, and scaling of green technologies.
Mr. Hai believes that the growing trend of foreign investment focusing on the green economy represents a vital shift towards sustainable development globally. “For green startups like Altern , this signifies access to not just capital but also international networks, expertise, and markets,” he explained. “Such investments encourage innovation and help in scaling up sustainable solutions, providing an essential boost to startups aiming to address climate change challenges. This influx of greenfocused capital is a strong indicator of the global emphasis on environmental sustainability and supports startups in pioneering green solutions.”
Vietnam is consuming about $12 billion of plastic products each year. If it was to switch to organic materials to replace plastics, the amount of money saved from cutting 12 million tons of carbon dioxide emissions each year would be equivalent to $60 million. “The market potential is huge for Buyo’s development,” Ms. Hanh said. “Vietnam also has a team of good scientists at cheaper cost than in countries and regions such as Singapore, the US, and the EU. While the government has only recently promoted the green economy and the circular economy, awareness among Vietnamese consumers about the green economy is quite high compared to other countries.”
Mr. Phan Nhat Minh, Head of Malaysia’s Gobi Partners in Vietnam, said the green economy is a large and new field but when a green startup registers to establish a business, it must choose traditional industry codes, because there is no separate industry code for the green economy. “Some green startups are classified in the environmental industry, which is a conditional business with foreign investment restrictions,” he added. “Therefore, to attract foreign capital into green startups, there needs to be a place to deploy a green economic sandbox, similar to the sandbox plan in the financial industry.”
Some organizations are also interested in the prospects for green bond and carbon credit markets. Mr. Alex Downs, Investment Manager at the Dutch Fund for Climate and Development (DFCD), said they are waiting for policies on a carbon credit market.
Regional countries and territories such as South Korea, Singapore, and Hong Kong (China) have very attractive policies in place to attract tech startups to set up headquarters and labs, conduct research, and expand production and business. The competition to attract tech startups, especially in green materials, is especially hot despite the quiet global economic context. “We hope the government will offer timely support to retain and nurture Vietnamese startups,” Ms. Hanh said. ◼
Green startups are not yet attractive to investors because their profit margins or growth rates are significantly lower than tech startups.”
Ms. Marina Tran Vu CEO and Founder of Equo