A Boost to Investment in Start-up Ecosystems

10:45:08 AM | 18/6/2019

The Ministry of Planning and Investment initiated and coordinated with the Ministry of Science and Technology and Golden Gate Ventures Investment Fund to organize Vietnam Venture Summit 2019 for the first time. The conference aims to strongly promote the connection between the Government of Vietnam and domestic and international investment funds, to continue developing Vietnam's start-up ecosystem.

More than US$400 million committed to pour into Vietnam's start-up

For the first time, more than 100 international investment funds will be present at Vietnam Venture Summit 2019 - to learn about the domestic entrepreneurship ecosystems and seek opportunities for cooperation and investment. This event brought together big names like Softbank Vision Fund; Sequoia, SK, Temasek, Insignia, Golden Gate Venture and Hanwha, which are leading funds from Silicon Valley, Japan, Singapore and Korea connecting to exchange new development trends.

Topica Founder Institute (TFI) Annual Report on the Entrepreneurship Investment in 2018 said that in 2018 Vietnamese start-ups received US$889 million investment in 92 deals with domestic and international investment funds, three times higher than in 2017 (same number of deals) and six times more than in 2016.

At the same time, KrAsia, Bain & Co report showed that for early stage investment, ie "Seed" or "Series A" investment, Vietnam attracted about US$150 million in investment in 2018, double that of 2017. It is expected that in the coming years, Vietnam's early start-ups will continue to attract large investments with estimates of US$205 million, US$320 million and US$440 million respectively in 2019, 2020 and 2021.

Right at the forum, the Ministry of Planning and Investment and Golden Gate Venture Fund signed a Memorandum of Understanding to develop start-ups and organizations in the start-up innovation ecosystem in Vietnam. At the same time, 18 venture capital funds committed to invest US$425 million in the next three years for Vietnam's start-ups. In particular, Korea's DT&I Investment Fund decided to invest US$1.4 million in Start-up Propzy in the second quarter of this year. VinaCapital Fund will sign a strategic cooperation agreement with two Korean funds to mark the Fund's intention to invest US$100 million for start-up businesses in Vietnam within the next 3 years. In particular, European Chamber of Commerce in Vietnam (EuroCham) also shared information about the latest EU Fund for start-ups worth 3 billion euro.

Impression of Vietnam's start-up ecosystem

Speaking at the Forum, Deputy Prime Minister Vu Duc Dam commented that looking at the investment figures and opinions of international speakers, it is understandable why investors are interested in Vietnam. Vietnam has stability, peace, continuous high growth rate, the spirit of constant innovation and will create new opportunities for everyone. From start-ups to businesses and investors can find business opportunities in Vietnam to improve themselves, devote, create a career and bring good things to the community and the nation and the world.

Vietnam's start-up ecosystem in recent years has grown impressively in both quantity and quality. In 2012, Vietnam had about 400 start-ups, then 2015 it increased more than 4 times, reaching 1,800 start-ups. In the two years 2017-2018, there had been strong development with the current number of 3,000 enterprises.

Currently, Vietnam's start-up ecosystem is growing with more than 40 venture capital funds operating, doubling compared to 2015. Many large domestic corporations have joined venture capital investments such as FPT, Viettel , Vingroup, CMC, CenGroup and more than 40 incubators, organizations promoting business, 60 spaces for common work across the country. However, compared to other countries in the region, Vietnam's start-up ecosystem is still relatively young and not closely connected. Factors that contribute to the success of start-ups, including infrastructure, institutions, policies, finance, investment capital, markets and culture, continue to be improved step by step.

According to Minister of Planning and Investment Nguyen Chi Dung, Vietnam has attracted strong interest of venture capitalists by the following factors: Having abundant technological human resources; Being a dynamic and potential market; Vietnam creative entrepreneur community is growing strongly in both quantity and quality; Many start-ups have high levels of technology and innovation, not repeating business models and ideas that have been implemented in other countries. In fact, many Vietnamese start-ups have reached out to the region and the world, receiving investment of many international capital flows. Particularly, Abivin has become the champion of the 2019 Start-up World Cup competition with a prize of US$ 1 million. "Even so, creative innovation associated with growth and development of Vietnam is still not commensurate with the potential, and many areas have not been exploited and utilized to develop," the Minister stressed.

According to Minister of Science and Technology Chu Ngoc Anh, in the past time, the creative start-up ecosystem in Vietnam has been developed in policies, infrastructure, financial institutions and support services together with the Creative entrepreneurship is increasingly encouraged among young people. Many support programs have been implemented, such as the Vietnam - Finland Innovation Partnership Program (IPP), which has promoted the creation of a creative start-up; Project of Vietnam Silicon Valley; Projects: "Supporting the national start-up ecosystem of innovation until 2025", "Supporting start-up students to 2025", "Supporting women to start their businesses in the 2017-2025".

Government commitment

Recent 3-year data show that the amount of capital that start-up businesses receive from investment funds increases rapidly. In 2016, it increased by 49% year on year; in 2017, 42% year on year and in 2018, 205% year on year. "Hopefully by 2019 we will have impressive growth," said Deputy Prime Minister Vu Duc Dam.

Currently, the Ministry of Planning and Investment has developed a draft national strategy for industrial revolution 4.0, which is in the process of summarizing the opinions of the ministries.

The ministry is also developing a national innovation center. The center will be large-scale, fully promoting its role as a pedestal, as well as connecting businesses. The center is expected to be inaugurated by the end of 2020.

Minister of Planning and Investment Nguyen Chi Dung

In order to maintain the attractiveness of Vietnamese start-ups, Deputy Prime Minister Vu Duc Dam emphasized the role of Government and Governmental agencies, local governments in the task of improving stronger the business environment. In addition, strong breakthroughs in information technology (IT) development and IT-intensive economic sectors are needed. At the same time, we should continue to pay more attention to education, science and technology, which is one of the attractions of venture capital funds, technology start-ups with the most specific and guaranteed conditions, especially economic policies. The Deputy Prime Minister wants venture capital funds to really innovate, closely combine with investors, to have the necessary adaptations to accompany and develop products with start-up businesses.

As an agency on behalf of the Government in the task of forming, promoting start-up ecosystem in Vietnam, Minister of Planning and Investment Nguyen Chi Dung also committed to regular dialogue and discussion with venture investors. MPI also pledged to work closely with relevant ministries and agencies to develop appropriate solutions to quickly solve difficulties to facilitate and continuously enhance capital inflows into start-up ecosystem of Vietnam.

Nguyen Thanh