The US banking crisis is leading to an increase in capital flowing into Asian assets; experts believe that investors are showing strong confidence in China and emerging economies in the region. 

In 2023, it is considered as the “winter” of capital raising for tech startups due to shifting preferences among international and Vietnamese venture capital funds (VC); however, the recent surge in popularity of artificial intelligence (AI) applications like Sora and Chat GPT has caused many experts and investors to reevaluate the technology’s growth potential. 

Lucrative Asian Market

Moreover, financial market indices across Asia, excluding Japan, continued to increase after the collapse of Silicon Valley Bank (SVB) on March 10. During the same period, the US bank index saw an almost 10 percent decline.

Johanna Chua, Citibank’s managing director and head of economic and market analysis for the Asia-Pacific region, stated: “We believe that Asia remains relatively insulated from market shocks.” The depreciation of the USD following the US decline will support increased capital flows into Asia. 

The Asia-Pacific region also benefits from generally more flexible monetary policy, as reported by Bloomberg News. State banks in Australia, South Korea, Indonesia, and India have halted the tightening of capital, unlike their counterparts in Western countries.

Investors Taking Less Risks

The general secretary of the Vietnam Bond Market Association, Mr. Do Ngoc Quynh, highlighted the differences in capital markets between established nations like the US and Canada and developing countries like Vietnam. 

Also Read: Crafting a winning healthtech pitch deck: The insider’s guide to attracting investors in 2024

Investors in more advanced nations are willing to invest heavily in research and development even without knowing the final product. Funding research and development is a costly and risky endeavor. There is no guarantee that research products will be more optimized than existing ones, even with top experts.

On the other hand, one area where Vietnam’s financial sector lacks is in venture capital funds and funding sources for early-stage companies. 

According to Mr. Quynh, the model involves either seed or pre-seed funding, with investors willing to invest between thirty and fifty thousand USD when the project is in its early stages and undisclosed. Only a few successful initiatives are sufficient for hundreds of early-stage startup ideas—which are considered unprofitable—to break even or turn a profit in a few years. Creating such investors will be challenging in the current climate.

The Trend of Merging Blockchain and AI

The Decentralised Physical Infrastructure Network, or DePIN, is a space where blockchain and artificial intelligence intersect. Big data is the source of knowledge that AI needs to acquire, but the training process is very expensive. 

Entrepreneurs are developing a market where individuals with unused video cards can contribute to the system for others who need that resource for training, even though major players like iCloud, Amazon, and others do not yet provide AI services. This concept is referred to as DePIN and is gaining traction.

The combination of blockchain and AI is highly innovative. Some startups that combine blockchain and AI platforms have raised significant amounts, ranging from US$30 million to $120 million, which is a substantial sum, and there are not many funds capable of disbursing such large amounts.  

Also Read: Mastering the art of fundraising: Winning strategies to engage investors

Technology scientist Mr. Nguyen Trung Thanh, Chairman of the Web3 Committee at the Vietnam Blockchain Association, discusses the initial investments made by venture capital funds in projects related to deep learning or neural networks, the precursors of AI, in 2013.

At that time, these projects were not trending, and researchers struggled to follow the trend. Similar to the questions faced by investment funds today, how to conduct business and identify clients remain unanswered? 

However, they continued investing, resulting in the cutting-edge AI technology we have today. This demonstrates a high likelihood of success for new technology ventures and investors willing to invest. 

It is critical that the final product truly adds long-term value to society; blindly following trends can lead to financial failure. For instance, projects that develop AI technology but ultimately fail exemplify this issue.  

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