Vietnam, a dynamic startup market

VIISA signs a cooperation agreement to provide support for startups in Hanoi

Attracting investors

At a recent international conference themed ‘Vietnam Startup Ecosystem Lessons Learned from Israel’ jointly held by the Hanoi People’s Committee, the Israeli Embassy in Hanoi, and the FPT Group, National Agency for Technology Entrepreneurship and Commercialization Development Director Pham Hong Quat said Vietnam currently has about 1,800 startup businesses, 20 venture capital funds willing to support business startups, 21 startup incubators, and seven business promotion organizations.

According to Adrian Tan, Director of the Vietnam Innovative Startup Accelerator (VIISA) training program, Vietnam is the most dynamic startup market in the Southeast Asian region. “We believe Vietnamese startups will soon accelerate and grow up from thought to action. This will boost startup movements in Vietnam. We expect startup movements will create great value from technology to help improve the lives of people in the region and worldwide,” he said.

In recent years, Vietnam has seen the inflow of money from external sources to domestic startups. Vntrip.vn, an online hotel booking startup, recently announced that it has received about US$3 million of investment from foreign investment funds, including Fenghe Group and Hancock Revocable Trust invested in by John Wu - Alibaba’s Chief Technology Officer for 10 years. Standard Chartered Private Equity, an investment fund, and Goldman Sachs, a global investment bank, recently poured US$28 million into MoMo E-purse. Another experienced venture capital fund from the US’ Silicon Valley has also announced their intention to create a US$10 million fund to finance 100-150 startup projects in Vietnam. The funds for each startup would range from US$100,000-250,000.

Domestic investors have become interested in startups. The FPT Group and the BIDV Securities Joint Stock Company, for example, in association with the Dragon Capital Group and Hanwha Group of the Republic of Korea, have established the Vietnam Innovative Startup Accelerator (VIISA). VIISA works to provide training, investment, and support for startups in information technology, mobile devices, internet, and finance so that they can become successful businesses. Each startup will receive support ranging from US$15,000 to five percent of its assessed value throughout the training process. Besides, startups will also be supported in office facilities, technical resources, accounting services, and bank accounts.

Support policies

Addressing the above mentioned conference, Deputy Prime Minister Vuong Dinh Hue said Vietnam has the potential to establish an innovative startup ecosystem. The country has created a more favorable investment environment compared with that of 5-7 years ago. Foreign investment in Vietnamese startups as well as the number of new businesses in the country has increased. In the first eight months of this year, Vietnam saw 10,000 new businesses established each month.

Deputy Prime Minister Vuong Dinh Hue also indicated the government’s efforts to support startup businesses. A national startup information portal and startup assistance centers will be established in the near future. The government is intensifying propaganda to enhance community awareness about startup culture and spirit. The most important task of the government will be improving policies and legal documents to create financial mechanisms that facilitate startup business access to credit loans, and a legal framework for venture capital funds and startup accelerators. At the same time, the government will promote institutional reforms and put in place appropriate tax policies such as corporate income tax, personal income tax, or regulations allowing businesses to mortgage intellectual property and patent to borrow bank loans, and policies related to the role of banks and credit institutions in supporting startup businesses.

Ho Sy Hung, Director of the Enterprise Development Agency under the Ministry of Planning and Investment, said the department has drafted a circular guiding the establishment, management and operation of venture capital funds for innovative startups and submitted it to the government for consideration. Under the draft circular, investors will negotiate their capital contributions directly with startup businesses.

These venture capital funds for innovative startups will be established based on capital contributions from their members. State management authorities are responsible for confirming the establishment of the funds as well as agreements between investors, which will provide a legal basis to deal with disputes. The draft circular also stipulates some principles related to the establishment and management of these funds.

In the opinion of Vo Tran Dinh Hieu, an executive at the Dragon Capital Group, the Ministry of Planning and Investment needs to finalize the draft circular as soon as possible. Transparent and open mechanisms will encourage foreign venture investors to pour their capital into startups.

Quynh Nga