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Vietnam retains long-term potential, IDG Chairman says   2008-07-22 - ThanhNienNews

 
The VinaGames’ head office, one of the most successful portfolios among 32 companies that IDG Ventures Vietnam has invested in since 2004  
IDG Chairman and founder Patrick J. McGovern talked to Thanh Nien Daily about his visit to the country for the Vietnam Computer Electronics World Expo (VCW) and Vietnam ICT Outlook (VIO) 2008 from July 15-19.

 

 

International Data Group (IDG), the first US technology venture capital fund in Vietnam, announced new investments in two information technology companies, Brussels-based marketing and communications company Pyramid Consulting and online Vietnamese classified company Muaban.net, last week.

Thanh Nien: Please tell us your overall outlook of the information and communication technology (ICT) industry of Vietnam, including the shortcomings and prospects?

Patrick J. McGovern: IDG Ventures’ outlook on Vietnam’s ICT sectors remains decidedly positive.

The technology market in Vietnam has grown as fast or faster than we had hoped or expected when the fund was started.

The number of Internet users has increased almost four times since we made our first investment close to four years ago, and the number of mobile phone users has more than tripled.

In addition to the consumer market, the export and enterprise software market has also grown at a rapid pace over the last several years.

Investment in technology and its intelligent application will continue to remain an important source of productivity gains and competitiveness for Vietnam going forward.

While the prospects for the ICT market in the short and medium term remain very attractive, there are issues that remain of concern for us going forward.

The first relates to the education and training of engineers and the development of human capital in technology-related fields.

The community, government, and business must all work together to make improvements to education at all levels in Vietnam a long-term priority.

Why did IDG decide to invest in muaban.net and Pyramid this time?

Both these companies meet some of the most important criteria we look at when we make our investment decisions.

First and foremost, both companies have extremely talented and hardworking leadership and people.

Secondly, both companies are creating and applying technology to bring dramatic changes and create competitive advantages in their respective businesses.

Looking at each company individually, we are excited about muaban.net because it represents the intersection of a traditional business such as print classifieds with the enabling power of the Internet.

As has been evident in other markets, the Internet is the ideal medium for buyers and sellers to connect and conduct commerce.

Muaban.net will continue to innovate in order to serve its users better and to expand to be one of the leaders in e-commerce in Vietnam.

Pyramid Consulting is a leading-edge producer of online advertising campaigns, infrastructure and content.

The company has some extremely talented software engineers, graphic artists and creative staff who are doing world-class work for clients throughout the world.

They are on the leading edge of the revolution in media that is occurring globally as the Internet becomes commonplace in our daily lives.

Can you provide more details about your new venture investment of US$600 million in Vietnam until 2010?

Venture capital funds typically raise new funds and new investment capital every three to four years.

Our first venture capital fund in Vietnam was a $100 million fund that has now been fully invested.

We will be launching our second, early-stage venture capital fund of $200 million this year to continue investing in technology, media, telecommunications and life sciences companies.

Within a couple of years, we will be launching a growth capital fund that will continue to invest in follow-on financing for companies that have reached a stage where they need capital to expand into new markets and develop new opportunities.

We will allocate $300 million to this fund, bringing our planned total investment over our three funds to $600 million within the next couple of years.

What are the reasons for such huge investment from IDG in Vietnam despite the country’s current economic shortcomings?

One must remember that venture capital investing is very much focused on long-term results.

The typical venture capital cycle lasts five to seven years, and it takes a significant amount of effort and resources for young companies to develop and mature into market-leading companies.

When we make an investment in a company, we are committed to its growth and development.

Inevitably any company will face challenges and difficulties as it executes its plan and takes its products and services to market, and our work is centered on helping the companies we invest in navigate these challenges.

While there have been some recent challenges and difficulties in the market relating to inflation and other financial and monetary issues, our fundamental long-term view of the economic potential of Vietnam remains unchanged.

We still firmly believe that Vietnam will become a major center of technology and innovation over the next 10 – 20 years.



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