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IDG sets up two units to focus on promising Vietnam market

March 8, 2004

IDG is looking to replicate the success it reaped in China, where it was the first U.S. venture capital firm in the country, in another of the region’s ‘rising tigers’. Vietnam represents a significant opportunity for IDG, said Louis Nguyen, who was recently named managing director of the first U.S. venture capital company in Vietnam — IDG Ventures Vietnam — and CEO of another new business unit, IDG Consulting Vietnam.

Based in Vietnam, IDG Ventures Vietnam is a US $100 million venture capital fund that will focus on identifying and investing in promising Vietnamese enterprises. San Francisco-based IDG Consulting Vietnam will advise and provide research to U.S. and Vietnamese companies looking to expand into each other’s countries.

The core focus is the investment side,’ Nguyen said, ‘but we feel there is an opportunity for a consulting group to capture strategic IT opportunities for Vietnamese and U.S. enterprises that want to enter each other’s market. In order set up shop in either market, you need research, analysis and local resources to guide you, and that will be IDG Consulting’s role.’

Nguyen said IDG Ventures Vietnam will follow the model of IDG Ventures China, one of IDG’s five venture capital funds, which has enjoyed much success. Launched 10 years ago, IDG Ventures China gave IDG an early presence in the Chinese market and an ‘impressive’ return on investment, thanks to the close relationship it developed with the Chinese government in working closely with and co-investing in local IT firms. ‘Being there early or first has its advantages,’ he said.

IDG Ventures Vietnam is the first U.S. technology venture fund in the country. ‘This makes us unique,’ Nguyen said, ‘and attracts attention and cooperation from the local government whose top initiatives for the country are technology, training and education. Our technology domain expertise, combined with our connections to key overseas VIetnamese technology leaders, are unique value proposition in driving forward.’

Nguyen said that IDG Ventures Vietnam will look for IT companies that offer expertise in the areas of Linux opensource enterprise applications, software development and outsourcing, telecommunications and joint venture opportunities arising from a Bilateral Trade Agreement that opened up opportunities to U.S. technology companies to enter Vietnam.

The consulting division will offer its services to both foreign and local firms. There are ‘attractive opportunities’ for U.S. companies looking to enter Vietnam, according to Nguyen, but ‘there is not enough information on the market or the technology sectors, so they’re not aware of the opportunities there. We are planning to offer research analysis on the local IT sector and access to local partners. In the other direction, we plan to assist leading Vietnamese companies in sales, marketing and expanding into the U.S. market.’

Nguyen said that 65% of Vietnam’s population is under the age of 25. ‘This young and highly literate workforce is a tremendous asset in both costs and intellectual properties. As companies are created, these young managers seek world-class management training in order to be globally competitive. IDG Ventures Vietnam brings not only the capital to support the growth but also implementation from the experience and best practices of what we’ve learned from the five funds within the IDG Ventures family.’ IDG Ventures has two funds in the U.S., one in Europe and now two in Asia. He added that the Vietnamese government has also expressed interest in management training, as well as in bringing IT domain expertise and training into the country.

IDG has a high IT credibility image in the local market, Nguyen said. ‘According to [IDC Vietnam Country Manager] Tam Le, in Vietnam, there are ‘the three I’s’ — IBM, Intel and IDG. PC World Vietnam is very successful, and IDG’s conference business is huge here. There is an incredible thirst for technology knowledge.’ PC World Vietnam was launched in 1997, and the conference group has been producing shows for 10 years.

Nguyen, who has 15 years of experience in venture capital, mergers and acquisitions, and operational roles at Silicon Valley IT firms, said he initially expects to divide his time between Vietnam and San Francisco until a managing general partner for IDG Ventures Vietnam is hired there.

IDG Ventures Vietnam will eventually have five managing directors, including a managing general partner who will be based in Vietnam along with a support staff of five to seven people. Nguyen said the key challenge will be finding Vietnamese-speaking people with venture capital experience, Vietnamese government connections, and the right operational and financial background. ‘It has been a challenging process finding qualified people. We’ll have to do a lot of searching,’ he said.