Vietnam attracting investments for startups

HANOI: The wave of innovative startups in Vietnam has developed at “dizzying” speeds, attracting the attention of many domestic and foreign investors, speakers at a seminar entitled “Investment Policies for Startups” in Hanoi say.

According to statistics from the National Agency for Technology Entrepreneurship and Commercialisation Development, under the Science and Technology Ministry, Vietnam currently has about 3,800 startups.

Of those, 11 are valued at over US$100mil and three are valued at over US$1bil, including Momo, VNG and VNLife.

Vietnam is currently the third pole in the South-East Asian startup golden triangle, along with Singapore and Indonesia; having the perfect combination of leading technology talent, and an existing innovation culture, which is highly attractive for global investors.

An important factor determining the success or failure of startup enterprises is the ability to access capital.

A 2019 decree contained detailed regulations on investments for innovative small and medium startups and created the momentum for the creation and development of funds in Vietnam targeted at these types of ventures.

Statistics from innovation platform BambuUP show that there are currently about 210 venture capital funds operating and investing in innovative startups in Vietnam.

Of these, nearly 40 domestic investment funds were established with a total charter capital of more than 100 billion dong. The number of angel investors, although not too large, is also gradually increasing.

The Vietnam Innovation and Tech Investment Report published by the National Innovation Centre said that the total amount of venture capital in innovative Vietnamese startups reached US$1.4bil in 2021.

Of the total, according to technology accelerator ThinkZone, about 90% was from foreign venture-capital funds.

Because of this Vietnamese startups often have to organise according to the proposals of foreign investors and restructure to receive operating capital.

Foreign investors often require Vietnamese startups to restructure and establish a parent company abroad, usually in Singapore, and then invest capital into the parent company.

“When restructuring, Vietnamese shareholders will have to carry out investment procedures abroad to establish a parent company abroad, and then the parent company must carry out investment procedures from abroad to Vietnam.

“This is a reality not only in Vietnam but has taken place in most emerging markets such as Indonesia, Malaysia, the Philippines and China,” said a report from the government.

In terms of overall performance last year, in the current global economic context, venture capital activity in Vietnam continued to slow, marking a decline for two consecutive years since 2021.

The total value of deals decreased by 13% in the first nine months of last year, to a total of US$427mil.

However, quoting a report by consultants Bain & Co, the government said that Vietnam is leading the way in attracting long-term investors in South-East Asia.

The survey showed that investors believe that investment activity in Vietnam would increase by 83% in the 2025-2030 period, compared with now. — Viet Nam News/ANN