Investment for start-up enterprises is only initiation

Ms. Phan Hoang Lan, National Agency Entrepreneurship and Commercialization Development (NATEC) - Ministry of Science and Technology.

What activities is NATEC currently doing to support creative start-up enterprises?

In 2013, NATEC has been assigned by the Ministry of Science and Technology to assist in the implementation of the Silicon Valley-based technology commercialization project in Vietnam (acronym VSV project). Therefore, we have chances to access startup businesses looking for capital and put them into a fast training program. After 3 months of training, they can approach domestic and international investors and receive the right investment packages. Basing on that, proposals will be made to the government to have a scheme to support innovative business eco-systems. Therefore, there is a project to support the national innovation system until 2025, which was approved in 2016.

We often have meetings and are frequently looking for start-up activities, as well as listening to needs to be able to recommend suitable policies.

In your opinion, what are the specifics of investing in innovative startups that require a separate development policy for this activity?

Perhaps the most peculiar is the risk and unpredictability for this type of investment. People often say that out of 10 investment businesses, 9 would die, and no one can guess who will succeed. Therefore, those who invest in start-up business must understand clearly about starting a business and have money, then they can invest.

Firstly, in terms of capital, investment for a business, the initial stage - incubation will take from $ 5,000 to $ 10,000. But if you only invest in a business, the probability of loss is very high, so if you have money you will invest in 10-20 enterprises. So you must have money and experience.

Secondly, if the investors participate in investment without the risk being shared, they will find it hard to participate in this market. Ideally, we should have support policies and share risks with investors, including tax policies and policies on reciprocal investment (the investment) from the state to the private sector.

Is it due to the risky factor that most of the investment funds for start-ups today are foreign investors with strong and experienced capital?

This is completely true. Firstly, foreign investors have a lot of experience in terms of investment. Secondly, they have a huge amount of money. Meanwhile, in Vietnam the investment for start-ups is very new, so we do not have much experience as well as knowledge about investing in start-ups.

In addition, the policy framework for innovative start-up investment was only approved in March 2018 (Decree 38/2018 / ND-CP on investment for SMEs starting-up innovation) to recognize funds for innovative start-ups. In addition, the policy incentives, such as tax incentives, reciprocal investment and other issues are just at initial stages. Therefore, investing in innovative start-ups in Vietnam is just beginning. In my opinion, the new and upcoming policies will promote this capital market.

In the process of reaching out to startup businesses, what changes do you need to make to improve your start-up business?

In fact, the start-up policies in Vietnam are very new and it needs to take 2-3 years to complete the legal framework as well as support policies. For example, funding for startups is currently for funding research and development related activities. We neither have support policies for sourcing the market, going overseas… nor have investment tools, investment models such as a call center for community capital, or an IPO floor dedicated to start-ups, or policies for angel investors. Therefore, we are lacking many policy frameworks for the start-up market in Vietnam. However, ministries are actively studying and proposing to the Government to consider and decide on new policies.

What are the risks faced by start-up businesses when accessing funds from foreign investment funds?

In fact, the globalization of investment for start-ups is a trend not only in Vietnam but also in every country, because not all countries have the capacity to invest much for start-ups. As we can see in the world there are a series of start-up business investors investing in billions, that money in developing countries like Vietnam will be very difficult to obtain. It is inevitable that attracting foreign capital into Vietnam should be encouraged.

I can not call it risky, only call it difficult, and it arises from the capacity of the start-up business and the policy system that accompanies this process. In particular, how to attract foreign investors easily is what we need to focus on.

Thank you very much!