Company Visit - IDG Ventures Vietnam

Our first company visit in Vietnam was IDG Ventures Vietnam (http://www.idgvv.com.vn/). We met with Thu Huong Duong, PR & Operations Director, Hiep Do, VP of Business Strategy, and luckily a guy who was a client. I can't remember his name but, funny coincidence, he's a Virginia Tech grad living in Vietnam and married to a local woman (he's Korean). He started a company called iSphere. IDGVV is the first IT venture capital fund in Vietnam. They talked a little about their portfolio and it sounds like they have some good companies coming up that they hope to spin off either through IPOs or M&A. We got some valuable insight into what it would take to start doing business in Vietnam, and it's very similar to doing business in China. If you're one of the big boys, i.e. one of the true multinational companies that has a lot of money and clout, Vietnam offers you some amazing and lucrative opportunities. If you're a small or medium-sized company, than you do business at a much greater risk. One must also find the right local partner to do business with. This is crucial as they would be someone who would understand local culture and life and could keep one on the right path and avoid pitfalls.

And that's the tricky part.

Finding a good partner, just like in Vietnam, can be hard with the bad side of things leading to a disaster.

But, the opportunity and potential is there. The IT market in Vietnam is booming. Some interesting facts about Ho Chi Minh City is that about 65% of the population is below 35 years of age, and that in a city of about 8 million. The Internet penetration of the country is about 28%, which is actually pretty darn good. The mobile phone penetration is about 30%.

The strategy that IDGVV is following is to not reinvent the wheel. They copy what works and make it work for Vietnam. But, it remains to be seen if it will work outside of Vietnam.

Some of the issues that affect the IT sector and what IDGVV does is the Vietnamese education system. It doesn't encourage punctuality, professionalism, etc. IDGVV tries to set up companies to be in good positions and that involves working with the founders to make them better businessmen. That sometimes doesn't sit well with them. This is all in contrast to China where the government pushes the education system to develop more engineers, as detailed in Friedman's book The World is Flat, and even go so far as to sponsor national business contests where students design and develop a business plan and product and the winning team gets a cash prize. I read about that briefly when I was in Shanghai and got The China Daily. However, I have no doubt that Vietnam will soon follow China as they wish to be the next China. In fact, the folks at IDGVV told us that the government is letting private universities open up and they are passing tax legislation to allow for 0% taxes for education spending.

IDGVV is focusing on what they refer to as TMT - Telecom, Media, and Technology. The folks we met with told us that in the next 3 to 5 years, their biggest issue will be resources.

The folks also gave us some tips on how to do business in Vietnam. First, one has to establish a trust relationship with people. That's done by first having coffee with someone and learning about each other's families. Next they gave us these tips:

1. Find the right partner
2. Have patience since everything is done at a much slower pace

I think there was a third tip but I can't quite remember it. I'll try to ask around and get that down.

Anyway, these are my thoughts and impressions on the visit with IDGVV. It was great and the people were interesting.