DFJ VinaCapital: Venture Funding In Vietnam

DDART – Diagnosis, Decisions, Analysis, Reality Test

Stanford Sunspot TeamAditya Mittal Meng Kiat Chua Yuxin Chua Ye He

Diagnosis – Problems and Opportunities

Issues:• Brand building and Brand name recognition• Funds raised – Clarify goals!

– Positioning (Early or multi-stage? Vietnam or SE Asia?)– Actions (Need more funds?)

• Navigating the murky waters of Vietnam

Opportunity: • Early movers! Great scope!

Decisions VinaCapital made

1. Focus on early to expansion stage companies

2. Invest into Pre-IPO companies going private3. Raise more funds from GP and LP to create

$50M fund4. Partnering with DFJ allows better branding5. Special interest in Internet, Mobile and

telecom penetration

Our Decisions for DFJ VinaCapital

1. Keep all of early to expansion stage companies, but stick with proven technology

2. Invest into Pre-IPO companies going private, increase interaction with government

3. Raise more funds from GP and LP to create more than $50M fund

4. Stick to Vietnam and don’t try to expand to SE Asia

Focus! Stay Targeted!

Analysis – Vietnam

High Growth• Fast growing economy – GDP

growth rate third after China and India

• Lot of privatization happening• Rapidly increasing foreign direct

investment

8.43% as compared to 3.3% in US

But … Small Market• Despite rapid growth, the

total size is still relatively small compared to other countries

• Increasing competition from outside – Increased Volatility

• Internal corruption

$52.8B as compared to $12,455B in US

Analysis – Internet and Telecom in Vietnam

$300M TAM as compared to $1B in US for IT in 2007

But…Vietnamese govt. planned to inject $3.6B into the market to increase internet penetration from 15.8% to 34% by 2010.

Demographic: Most people under Age 35Proven: E-commerce and other web technologies

already proven in other nations

Analysis – Venture Capital in Vietnam/ASEAN

From 1998 through 2007, the quality of entrepreneurialopportunities increased and a venture entrepreneurship culture was established. Singapore was considered by many to be the most mature venture capital market in Southeast Asia.

Malaysian Ventures started in 1984, and was followed by 900 Multinationals and government has also taken great interest to maintain investment funds

The high growth market of China attaracted a rush of venture funds to China…and Vietnam can soon be seen as a “little” China

Analysis - Draper Fisher Jurvetson Offerings

• Top notch brand from Silicon Valley• Better deal flow• Network competitive advantage• Network intelligence• Network local support, global reach

Analysis – VinaCapital Positioning

1. VinaCapital is the evangelist for Vietnam2. Started in 2003 in Ho Chi Minh city3. Needs partnerships for stability and branding4. Helps DFJ in exploiting the Vietnam technology

market5. Has $250M in the Vietnam real estate market6. Creating $50M fund for the technology market

Reality Test - implementation risks connected with your decisions.

• Biggest Risks are: – Bad Legal System and high corruption– Lack of infrastructure to find right funding opportunities

• Hedge risk by adopting only technologies proven in the China and US markets

• Hedge risk of increasing volatility in market by raising more money to get better market penetration and maintain focus in Vietnam and not SE Asia

Reality Test - implementation risks connected with your decisions.

• Cultural Chasms – “Do you think I should do the dance here in Vietnam?” Tim asked his affiliate in Hanoi and Ho Chi Minh– The “Riskmaster” Don and Tim instantly hit it off

• Economic – don’t see a downside to helping boost the economy

• Ethical – don’t see any downside to honestly helping people build meaningful new companies

Thank you

Stanford Sunspot Team

Aditya Mittal Meng Kiat Chua Yuxin Chua Ye He

STOPBACKUP SLIDES BEYOND

Analysis

• Analysis of company, customers, channels, competitors, economics, environmental factors and ethical issues

• Diagnosis Where is this market in its life cycle? How attractive is the market opportunity?

• • Decisions What is your marketing (or business) plan?

• • Analysis Why is your plan the best way to go?

• • Reality Test What are the risks of your plan, and how can we manage those risks?

• marketing leadership in cross functional teams;

• economic analysis to assess the value of marketing activities; and

• ethical responsibilities to customers, investors, and the community,