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Economic Sector

Last updated: Wednesday, November 22, 2017

 

What Do Start-up Businesses Need?

Posted: Monday, September 11, 2017

At the beginning of 2014, Lozi was just an online platform for finding handy restaurants but, after only two years, it expanded its business to other areas such as fashion, cosmetics, accessories, electronic devices and books by connecting buyers and sellers. Lozi is now a popular community in Vietnam with about 400,000 users and monthly revenue of more than VND1 billion. At the end of 2016, Lozi received a US$1 million investment from South Korea.

Lozi is among many start-up businesses in Vietnam. As the world started the race to the Fourth Industrial Revolution in 2016, Vietnam has aggressively accelerated to catch up with this trend. To date, Vietnam has over 1,800 start-up businesses, 21 incubators and seven business promotion agencies. These models are playing an increasingly important role in fostering start-up formation and development in Vietnam.

Attracting venture capital funds
Currently, Vietnam is ranked third in the list of best countries to invest. The country has particularly attracted venture capital funds around the world. A typical example of successful fundraising is MoMo, considered one of the most successful fundraising of start-up companies in Vietnam to date. MoMo, a platform of M_Service Joint Stock Company, received more than VND600 billion of investment capital from Standard Chartered Private Equity Investment Fund and Goldman Sachs, a global investment bank. Mekong Capital invested US$10 million in F88 (a pawn shop chain). Capricorn funded US$9.1 million into GotIt! (an educational application). 500 Start-ups of the United States invested US$150,000 in Beeketing, which is valued US$2.5 million now.

500 start-ups also have announced a decision to set up a small private fund of US$10 million to finance 100 - 150 Vietnamese start-up businesses. Each support has a value ranging from US$100,000 to US$250,000. In the next five years, these 500 start-ups will raise their start-up support fund to US$100 million.

In the past two years, innovative start-ups, incubators, start-up investment funds and business promotion agencies have increased in both quantity and quality. Without doubt, this is the time of starting a business for all classes of people, especially the younger generation.
Do not let start-up businesses die young

The robust growth of start-up businesses is the driving force for others to follow. However, the reality is always harsh. Many start-ups die before they take full shape.

Perhaps, the biggest difficulty of a start-up is how to organise group work. Start-ups in Vietnam are often led by young team leaders who may lack entrepreneurial virtues to steer a business. Meanwhile, in order to be successful, start-ups are not only equipped with product knowledge but also governance skills. For that reason, start-ups need to find qualified people to support their start-up projects.

In addition, the lack of communication and marketing skills makes it difficult for them to launch successful products.

Furthermore, according to many experts, components of a start-up ecosystem in Vietnam are already sufficient but their small-scale fragmented operations fail to meet the needs of the start-up community. Start-up projects and individuals lack a suitable playground, lack finance, management and communication skills, and lack a legal system to protect and nurture start-ups to grow.

Mr Tran Huu Duc, Director of FPT Ventures, said, regulations on investment ventures – the essential component of a start-up ecosystem - is not clear.

Mr Tran Van Tung, Deputy Minister of Science and Technology, said that Vietnam needs to make sure that a legal environment is public and transparent in all processes like providing information on business establishment procedures. This will ease up business start-up in Vietnam. In addition, policies on investment in Vietnam should be clearly specified to make investors feel assured of doing business in the country.

Many experts also pointed out that the state should play a helping role. It will help start-up businesses while they still weak.

On the basis of the National Innovative Start-up Ecosystem Support Project to 2025, the Ministry of Science and Technology has coordinated with relevant ministries and sectors to develop and promulgate a consistent legal framework and necessary mechanisms and policies to develop scientific and technology market, support and invest in start-ups.

Then, the ministry will at first establish and develop the domestic science and technology market comprised of technology and equipment markets and tech start-up fairs. In the coming time, it will coordinate ministries, branches and organisations to support domestic and foreign start-ups to interlink start-up ecosystem components as well as learn experience from the international start-up community.

Quynh Anh








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