Foreign startups are eyeing Vietnam as one of their main markets thanks to the country’s large and young population, low costs and cheap and abundant labor force abundant.
Vietnam has been among the top markets in terms of revenue for Singapore’s insurance startup Igloo ever since the company was launched in 2021.
“Vietnam is becoming one of our key markets,” Nguyen Huu Tu Tri, CEO of Igloo Vietnam. “The country’s insurance industry is set to reach $3.5 billion in 2026, but only 2-3% of that goes to tech insurance,” he said, adding that this means there is a large room for tech insurance growth.
In its two years of operation, Igloo has sold 13 million insurance policies in Vietnam,10 million in last year alone. The target customers are people with low incomes who are not yet insured.
The company also chose Vietnam as a site to launch its first insurance policy aimed at protecting rice farmers using weather data and blockchain.
Igloo hopes to become the top insurtech company in Vietnam.
For India’s car rental startup Zoomcar, the market in Vietnam is promising as the country has a population of nearly 100 million people and a growing demand for cars.
Zoomcar connects unused car owners with renters and has recorded over 100,000 registered users, including 3,000 car owners.
“We are approaching the breakeven point on each trip and expect to grow 200%-300% this year,” said Kiet Pham, national manager of Zoomcar Vietnam.
Vietnam’s advantage lies in its young and tech-savvy population and its rising middle-class, the two startup leaders said.
Tri said that after the Covid-19 pandemic people are starting to be more interested in insurance products, with a surge in the number of those who are ready to make purchases.
Zoomcar sees a large demand for car usage in Vietnam. However, the company says that the cost of owning a vehicle is high, which means there will be a large demand for rental services.
Vietnam’s car rental market is set to reach $884 million by 2027 with a compound annual growth rate of nearly 14%, according to market researcher Mordor Intelligence.
“Vietnam is the fastest growing market for Zoomcar in Southeast Asia,” Kiet Pham said.
The number of start-ups from Singapore venturing overseas through Enterprise Singapore’s Global Innovation Alliance (GIA) acceleration programs has ballooned to more than 400 in less than five years. And one of the more popular destinations is Vietnam, with its large workforce, lower labor costs and sizable market.
From 2020 to 2022, nearly $2 billion has been poured into startups, according to the Ministry of Planning and Investment.
The Vietnam Silicon Valley Capital Investment Fund, a partner of Lotte Ventures and Korean government agency KISED, last year introduced 14 excellent Korean startups, which plan to bring new products to Vietnam.
Hong Sun, vice president of the Korean Chamber of Commerce and Industry, said that Korean startups tend to invest in Vietnam after they see many successful companies in the market. He also forecast that many new startups will come to Vietnam in the near future.
Last year, a report by the World Intellectual Property Organization (WIPO) said that Vietnam ranked 48th out of 132 countries and territories in achieving the greatest progress in the past decade.
Although Vietnam has fallen four places compared to 2021, it is still in the third position in Southeast Asia, after Singapore and Thailand. Vietnam is also ranked 54th in the global innovative startup ecosystem, up five places compared to 2021
But startup insiders have found many challenges, especially in changing user attitudes.
The technology insurance industry, people’s confidence in insurance in general is low and therefore people are not willing to pay for it.
Furthermore, the lack of high-quality human resources in the technology sector will make it a struggle for Vietnam to meet the development needs of foreign startups.
