Private capital market rebounds as AI emerges as investment magnet

Private capital market rebounds as AI emerges as investment magnet

Việt Nam's private capital market is entering a new growth cycle, with both private equity (PE) and venture capital (VC) investments rebounding strongly after a prolonged slowdown, according to a report released on May 28.

Private capital flows into Việt Nam increased sharply in 2025, with AI attracting a growing share of investment. — VNA/VNS Photo

Việt Nam's private capital market is entering a new growth cycle, with both private equity (PE) and venture capital (VC) investments rebounding strongly after a prolonged slowdown, according to a report.

The Vietnam Innovation and Private Capital Report, jointly published by the National Innovation Centre (NIC), the Vietnam Private Capital Agency (VPCA) and Do Ventures, showed that total private capital investment reached approximately US$4.5 billion across 149 deals in 2025.

Private equity led the recovery, hitting a record $4 billion, while venture capital investment rose 28 per cent year on year to $509 million.

Although the number of VC transactions declined to 104, average deal sizes increased significantly, driven by investments ranging from $3 million to $10 million and deals exceeding $50 million.

The report found that Series A and Pre Series A fundraising activity remained resilient, while the number of late stage C+ transactions reached its highest level since 2022, reflecting the growing maturity of Việt Nam's startup ecosystem.

In the PE segment, mid-market investments recorded a historic high of 12 transactions. Essential consumer goods attracted $1.2 billion, the largest amount in a decade, while growth equity investments posted their strongest recovery since 2021.

International investors are also returning in greater numbers. The number of active PE funds more than doubled to 48, the highest level since 2016.

Singapore remained the leading source of VC investment, while investors from the US and Europe expanded their presence in the market.

According to Lê Hoàng Uyên Vy, chairwoman of VPCA, Việt Nam's venture capital market has moved beyond its downturn and is now on a clear recovery path.

She said investors were concentrating larger amounts of capital into fewer companies, reflecting stronger confidence in carefully selected businesses.

One of the most notable trends highlighted in the report was the rapid rise of artificial intelligence investment.

Funding for AI startups surged to $130 million in 2025. Between 2023 and 2025, AI investment increased thirteen fold, while the number of transactions nearly doubled to 23 deals.

The report said the trend underscored growing investor confidence in Việt Nam's expanding AI startup ecosystem.

Beyond AI, health technology, retail technology and climate technology also attracted increasing levels of investment, signaling a shift towards sectors linked to long-term economic transformation.

Ben Sheridan, managing director and senior partner at Boston Consulting Group (BCG), said Việt Nam had emerged as one of the region's strongest venture capital recovery stories.

According to BCG, the country will need approximately $270 billion in additional capital annually through 2030 to sustain its economic growth ambitions.

“With outstanding credit already equivalent to around 140 per cent of GDP, much of the remaining funding gap will need to be filled by private capital, including equity investment and alternative financing channels,” Sheridan said.

BCG estimated that only 12 to 17 per cent of Việt Nam's financing needs are currently met through capital markets. The share will need to rise to at least 25 per cent by 2030 to support high growth.

Investors are increasingly optimistic that reforms such as the KRX trading system, plans for the Vietnam International Financial Centre (VIFC) and progress towards market upgrading will help expand the country's capital markets and create new opportunities for initial public offerings in finance, consumer and technology sectors.

Dedicated exchange proposed for innovative enterprises

Alongside the recovery in private capital flows, policymakers and investors are calling for new mechanisms to help technology companies access capital markets more effectively.

Phạm Thị Thuỳ Linh, head of market development at the State Securities Commission (SSC), said the Ministry of Finance is drafting regulations for a dedicated trading platform for innovative enterprises under the Law on Innovation Support.

She said regulators had been working with the Ministry of Science and Technology and innovation focused businesses to design a market better suited to startup fundraising needs.

According to Linh, many innovative companies, particularly those in early stages, struggle to meet traditional listing requirements such as profitability thresholds and minimum capital requirements.

Regulators are therefore considering alternative criteria that better reflect the characteristics of technology firms, including revenue growth and research and development spending.

The specialised platform is expected to be incorporated into a broader equity market development plan and could be completed this year for launch in 2027.

From an investor perspective, Vương Vân Anh, senior strategy director at VinaCapital, said many Vietnamese technology startups continue to delay domestic listings in favour of overseas markets.

She noted that valuation differences remain a key obstacle.

While founders and international investors often focus on technology, intellectual property and growth potential, domestic investors tend to place greater emphasis on tangible assets, profitability and dividend performance.

Existing listing requirements, including profit track records, also create challenges for high-growth technology firms.

Vân Anh said the proposed dedicated exchange would be a positive step, but stressed that Việt Nam still needs more long-term patient capital and stronger ecosystem support to help startups scale from early stage fundraising through IPOs.

Industry experts agreed that developing long-term capital pools and supportive policies will be crucial if Việt Nam hopes to build a new generation of technology champions and deepen its capital markets in the years ahead. 

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