DFJ-VinaCapital: Venture Funding in Vietnam

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Class project on developing a recommendation for Venture Capital firm DFJ-VinaCapital in Vietnam.
Part of MS&E 271: Global Entrepreneurial Marketing - Stanford GSB

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  • CI – Corporate InvestmentII – Institutional InvestmentHN – High Net worth Individuals
  • DFJ-VinaCapital: Venture Funding in Vietnam

    1. 1. Venture Funding in VietnamGEM DUORaghu Krishnamurthy Erich GunsenheimerGrade = 9.350 out of10 possible points10 = A+ = Perfect!!!9 = A =Outstanding8 = A- = Excellent7 = B+ = Very Good6 = B = Good5 = B- = Needs Improvement<5 =U = Unsat/Missing
    2. 2. Diagnosis – Venture Capital in Vietnam and SEAVery nascent market with big prospects:• Economically very solid seen (Ie: CN & IN)• Internet Pen. expect to double to 30%• Funding focused on SOE privatization• Early stage & seed funding is low• Most of funds invested domestically• Many similarities with early phases ofChinese VC marketTALC of the Asian VC Market - 2007VN PHIDMYSGJP
    3. 3. Stats of the Asian VC Market - 20037314118117VNCNIDMYPHSG200# of VC Funds % invest locally15%80%92%60%86%80%Source: AVCJ, The 2003 Guide to Venture Capital in AsiaDFJ VinaCapital is a newcomer andchallenger:• Very limited number of VC• IDG has huge reputation due to largesuccesses in China and India operations• DFJ already has operations in Singapore:avoid cannibalization of investments.TALC of the Asian VC Market - 2007VN PHIDMYSGJPDiagnosis – Venture Capital in Vietnam and SEA
    4. 4. Product Experience – DFJ VinaCapitalEntrepreneursInvestorsTheProductGlobalAccess toFundingInvesting inuplift of localeconomyCross-expertiseamong investedcompaniesVinaCapoffers localexpertiseDFJ offershighreputation &credibilityVinaCap localexpertise &networkHigh ROI fund& allowsdiversificationBest-practicefrom DFJ pastclients
    5. 5. 01002003004005002001 2004 2010TurnaroundBuyoutMezzanineExpansionStart-upSeed157m436m150mVC Industry Capital Pool - Vietnam38%10%34%5%5%8%Corporations Government BanksPrivate Inv Pension Funds Insurance Co.Institutional Source of VC - 2003Why invest in DFJ VinaCapital?• Core management team is highlyexperienced in venture capitalinvestments.• DFJV understands the great potentialwithin the Vietnamesetechnology, media and telecom sectors.• Focus on four high growth sectors:Internet, telecommunications, mediaand clean energy.• Invest in 2-3 anchor companies in eachsector to create a network, user baseand market share.• Target ROI is 30%• Convergence of the focus sectors over a4-6 year time frame• Apply best practices from experience inVietnam and Silicon Valley.Source of Funds – DFJ VinaCapitalSource: AVCJ, The 2003 Guide to Venture Capital in AsiaSource: AVCJ, The 2003 Guide to Venture Capital in Asia
    6. 6. Analysis – Positioning & CompetitionHighReturn/FeesLowReturn/FeesLow Risk/ Mature Early Stage/ High RiskReal EstateCash/SavingsIM-PEVCCasinoMarket Position Map – Investment Products in VietnamFor Vina:Space currentlyunfulfilled withhigh fees andhigh growthOnly 1 real butstrongcompetitor in themarket
    7. 7. Analysis – Positioning & CompetitionStrength•Global Networkand Reputation•New Fresh Image•Early entry•Success in CN•Raised $100m•French•Established• Vietnamese• SOEinvestmentsWeakness•American•Low AsianAwareness•American•IDG ~ OldFashioned•Lack globalnetwork•Multi-sector• PE focused• Mainly non-techFund Raised $25->50m $100m $60m $50m
    8. 8. Analysis – Channel / Go-to-MarketInvestorsInstitutionalInvestorWealthyInvestorsCorporateInvestorTechCompaniesGovernmentContactRoadshowIndustry meetingsVC meetings in SEA- VinaCap inv.- Communities inFR, US, SEA- DFJ clients- I-Banks- Other VC FundsWho Value Prop.RoadshowCom. Finance ClubsDFJ NetworkCompanies withcorporate VC armIntel, MSFT, EbayDFJ NetworkPast investmentsclients- Pension Funds- Private Equityfirms- Sovereign Funds- US/ French GovFundsVinaCapital NetworkDFJ NetworkGovern. RelationsDFJ CredibilityDiversificationDFJ CredibilityVinaCap ExpertiseRoadshowIndustry meetingsPRFoot in the marketCheap way to haveoption to enterRepair politicallyDiversify FDI
    9. 9. 1 100 $5m1 200 $5m28 2.7m $7m2 100 $5m2 30 $3mTargetCustomerTotalPopulationTotalFundingAnalysis – Investor Acquisition and Roll-out13 3 3 3 3 32571012 12 12Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7State-OwnedStart-upInvestment Roll-out – DFJ VinaCapital
    10. 10. Seed Start-up State-OwnedMobileOperators• Semi-conductors• E-commerce• BPO• Datacenters• WirelessApps• BiotechAnalysis – Investor Acquisition and Roll-out
    11. 11. Risk Mitigation StrategyWhat will you do to avoid it?Contingency PlanWhat will you do if it happens?NascentMarket• Experienced management involvingdomain experts• Diverse investments, high growthfields.• Increase investment in lower riskbusiness• Reduce investment in non-performing business.• DFJ to do the Due Dilligence foreach investmentPolitical Risk • Insure with International Agenciesand Local Bodies• Partner with Local Expertise• Reduce / pull out from investmentsLiquidity Risk • Partner with diverse customersegments (CI, II, HN)• Raise funds globally. HighlightVietnam Potential.• Pull out of non-viable investmentsTalent Risk • Mentor Startup Founders• Partner with Top University• Take advantage of synergiesbetween investee companies.PR Risk • Highlight benefit of VC todevelopment of Em. MarketsSource: MS&E 271, GEMReality Test

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