Economic Sector

Last updated: Friday, March 22, 2019


Becoming a Start-up Nation

Posted: Friday, February 09, 2018

The start-up country gives priority to the start-up ecosystem development, including venture capital (investing in innovative but risky ideas), to boost socioeconomic development. Under the current context, investing in innovative start-ups is perhaps the only way for Vietnam to accelerate its development. This is the only way for it to achieve industrialisation and modernisation goals.

How to become a start-up nation?
Starting a business is simply understood as pursuing risky decisions for the future. This is almost an indispensable business activity but not all start-ups are successful because of risks. Neil Blumenthal, CEO of Warby Parker Company, said, “A start-up is a company working to solve a problem where the solution is not obvious and success is not guaranteed.”

The composition of an innovative start-up ecosystem consists of basic components starting with the government which plays an important role in issuing policies and creating a regulatory corridor for building a successful innovative start-up ecosystem like protecting intellectual property of every organisation and individual, setting rules on technology transfer and intellectual property transfer, protecting investor interests, stimulating investment in technological research and application, and allowing establishments and creating operating mechanisms for both public and private venture funds, and service providers in the technology market. Investment funds will provide seed capital for innovative start-ups. At present, the establishment of venture capital funds is not feasible due to legal hitches in Criminal Code and State Budget Law.

Start-up groups play an important role in the start-up ecosystem. Once invested, they will have resources to translate their ideas into reality. Some successful start-ups of Vietnam come from research institutes and universities, but they are just like small sparks of fire that cannot form a burning flame in the business community, thus failing to help Vietnam to have 5,000 scientific and technological companies by 2020 as expected.

Angel investors, who are voluntary investors, accept risks unavoidable in starting a business. In case of success, they will share the profit and, if not, they share risks as well. Besides, they invest via investment funds or financial institutions which will act on behalf of investors to use funds, employ legal and business consultants, protect interests of investors and share profits and risks alike.

The start-up ecosystem also includes innovative business incubators, which provide support services for innovative start-ups in the course of operation.

Start-up and culture of accepting failure
On June 4, 2013, the Ministry of Science and Technology approved the “Technological commercialisation project according to the Vietnam Silicon Valley Model - VSV”. The project is designed to promote the commercialisation of priority technologies in such fields as energy, biomedical, engineering, automation, new materials, information technology, and telecommunications according to the Silicon Valley model. Within two years of stakeholders’ determination to support innovative and start-up entrepreneurs, the project was able to carry out many contents beyond its resources like organising training courses for innovative start-ups in Vietnam to create opportunities for them to study, cultivate knowledge, exchange and seek co-founders, and get direct consultations from seasoned experts, including foreign specialists.

After two years of pilot, the Ministry of Science and Technology has advised and supported the establishment of Scientific and Technological Business Start-up Fund, the first private venture capital fund in Vietnam. Regrettably, fund establishment and operation procedures are too troublesome, time-consuming, in addition to much preparatory time for operation. Moreover, the legal corridor is not favourable enough for the fund to develop.

The start-up ecosystem that VSV created is still fledgling but promises to improve Vietnam's start-up ecosystem in the future. Therefore, it is being proposed to become a national project and submitted to the Prime Minister for approval.

In mid-May 2017, Deputy Prime Minister Vuong Dinh Hue hosted a dialogue with the business community and small and medium enterprises across the country within the framework of the Young Entrepreneurs and Young Entrepreneurship Forum themed “Innovative Entrepreneurship - Understand right, act right”. The forum addressed financial and capital issues for innovative start-ups, legal corridor for business operations and proposed mechanisms for shaping start-up ecosystem.

“No one wants to fail but very few succeed. Thus, investing in start-ups is a risky venture and a start-up investment fund is a venture fund,” he said. But, just one success will bring an enormous value to human life. “We need to learn the culture of accepting failures, accepting risks, and the process of starting a new, innovative business is a never ending process, not just for an individual start-up, a household start-up, a corporate start-up, a multinational corporate start-up but also a local start-up and even a national start-up,” he said.

Le Minh

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