As many startups, whether aspiring or those in the scene for some time, can attest to, operating in Germany comes with its fair share of challenges. From bureaucratic intricacies to cumbersome administrative processes and the complex legal landscape, startups often have to jump through numerous layers of hurdles before getting into doing business. This journey becomes even more demanding when startups scale beyond German borders, encountering a new set of obstacles and issues associated with international expansion.

So, when Nga Le, the CEO and Founder of digital education consultant EDUBAO, set her sights on expanding the company’s operations into Vietnam in 2019, she uncovered a solution in the form of German Accelerator.

“It was actually by chance or luck, as I would put it,” she recalls.

For EDUBAO, its expansion journey in Vietnam began when the budding company, in its incubator phase with German Industry and Commerce Vietnam (AHK) in Ho Chi Minh City, was preparing for the grand opening of its office. During this time, Nga had the privilege of meeting Mr. Claus Karthe, the CEO & Founder of German Entrepreneurship Asia, who encouraged her to apply for German Accelerator’s Southeast Asia Market Access Program in 2019. Nga and her team went on an intensive learning journey of invaluable guidance, support, and mentorship from German Accelerator in getting access to and entering international innovation hubs. There, they gained insights on getting into the startup culture in Vietnam.

Choosing to Expand to Vietnam 

The idea to establish EDUBAO and to first target the Vietnamese market was sparked by Nga’s Vietnamese heritage, her experiences growing up in Germany, and her motivation to fill a gap in the market.

During that time, Nga was receiving numerous inquiries from relatives and friends of relatives seeking guidance on sending their children to German universities. Notably, she recognized the appeal of Germany’s free or low-cost tuition fees, even for international students – a significant advantage she aimed to leverage. These prompted her to delve deeper into the local education consulting market and uncover the need for a reliable and affordable service.

As Nga puts it, expanding EDUBAO’s operations to Vietnam was a “no-brainer.” She saw promise in expanding in Vietnam due to its fast-growing economy and vibrant population.

“Vietnam seemed to be the best market to enter as it wasn’t as big as China, but was big enough to grow,” she says.

For one, Vietnam has a thriving population of almost 100 million people, which makes it a region with a vast customer base and market potential to tap into. According to Nga, it’s also one of the fastest-growing economies in Asia. The annual compound rate of growth, for instance, had been well above eight percent in recent years. Nga also highlights the free trade agreement between Vietnam and the European Union (EU).

“I believe that the free trade agreement between Vietnam and the EU will accelerate the growth, and that makes it likely that the middle-class population will grow even faster,” says Nga, adding that EDUBAO’s solutions mainly cater to the middle-class population.

Today, Nga holds a positive outlook on Vietnam’s startup landscape, again emphasizing its potential due to a young and vibrant population coupled with a rapidly expanding economy. She also highlights the current political developments which have positioned Vietnam as an attractive alternative for larger companies.

How Understanding Vietnamese Culture Plays a Role in Success

When entering the Vietnamese market, startups should be aware of certain factors that can help them succeed. According to Nga, the first thing is understanding the pace of doing business in Vietnam, which tends to be faster than what entrepreneurs in Germany might be used to.

“It’s not like in Germany, where contracts can sometimes go back and forth for weeks or months. They would sometimes expect you to give a definite answer within a week, or even the next day,” she elaborates.

Nga also addresses some perceptions of how having connections to the Vietnamese culture can give companies an advantage when it comes to scaling.

She shares how hiring someone of Vietnamese descent who possesses cultural understanding and market insights can level the playing field and contribute to building strong relationships with investors and other stakeholders.

For instance, she recognizes that being able to approach Vietnamese corporations and partners in their own language provides a significant advantage for her. Speaking the local language establishes a deeper level of communication and rapport, making negotiations and interactions more comfortable and effective.

But what about startups that really want to expand to Vietnam, but lack familiarity with the Vietnamese language? Nga is certain that they can find reassurance in the German Accelerator Southeast Asia Market Access Program. She highlights that the program serves as a valuable bridge, thanks to its mentor network in Vietnam that can open new doors for startups with valuable connections and insights.

“I think it always helps to have people on the ground,” adds Nga.

“Asian markets, in many ways, function differently from the European markets. And you can only grasp that when you’re on the ground,” she elaborates.

She also suggests aspiring startups to enter new international markets with a good partner, such as German Accelerator.

“I really don’t recommend that startups do it on their own because legal frameworks are really very different amongst countries – especially if we’re talking about Europe and Asia,” she explains, citing accounting and regulations as a few of the key factors.

Thirdly, she suggests that aspiring startups looking to expand into Vietnam should aim for slow and steady growth – in her words, a “long-term investment” where one needs to have grit and long-standing ambitions.

“There will be no quick wins in Vietnam. You shouldn’t go into the market believing that the fast-growing economy will make you a millionaire in a year”

 

Nga Le | CEO and Founder of EDUBAO

Navigating Startups’ Biggest Obstacles With German Accelerator

As EDUBAO faced the challenges inherent in its early stages of scaling, German Accelerator proved instrumental in navigating the bureaucratic landscape that often hinders German startups.

For EDUBAO, such obstacles were further intensified with administrative procedures related to expanding to Vietnam as the business environment in Vietnam could sometimes be restrictive, and accounting rules and regulations are significantly more burdensome than those in Germany or Europe.

German Accelerator emerged as a critical ally for EDUBAO, introducing them to expert mentors from prestigious firms who could offer legal advice that would typically be unaffordable for small startups.

Nga expresses her gratitude for the expansive mentor network provided by the program, which consistently made her feel encouraged and empowered to seek guidance. The sessions with experienced mentors provided not only valuable insights but also innovative solutions, opening their eyes to new possibilities they hadn’t considered before.

“All our mentors actually were very helpful and dedicated to giving us tips – you really have the feeling that they’re doing it out of passion and not simply because they’re paid to do it,” she comments.

German Accelerator also played a pivotal role in connecting EDUBAO with potential partners and investors. Participating in the program facilitated EDUBAO’s fundraising efforts, enabling it to secure government grants and attract business angels, resulting in subsidies ranging from 100k to 250k Euros. Ndga highlights the program’s ability to enhance visibility, making her startup more appealing to investors. Being associated with German Accelerator served as a stamp of quality and reliability. Investors who recognized the program were more inclined to review EDUBAO ‘s pitch decks, especially as the company sought cooperation partners beyond Germany.

“When you identify yourself as part of the German Accelerator program, it’s always a sign of quality,” Nga explains.