Startups adjust to a firmer footing

Techfest Vietnam 2024, which was held in the northern city of Haiphong on November 26-28, marked the second participation of Park Dae Hee, chairman of the Daejeon Center for Creative Economy and Innovation (DCCEI). He said that while last year five South Korean startups participated, this year the DCCEI brought nine companies, Technopark Daejeon introduced five companies, and the Jeonbuk Center brought four.

Prime Minister Pham Minh Chinh attended the National Innovative Entrepreneurship Day (Techfest Vietnam 2024) in Hai Phong city on November 27. Techfest Vietnam 2024 provided a space for networking and knowledge exchange between emerging start-ups, investors and other key stakeholders, creating opportunities for long-term collaboration and business development. VNA Photo: Dương Giang

“We plan to establish a group between Daejeon City and the Ministry of Science and Technology (MoST) to build an operating space, which will act as an overseas liaison office. This space will support potential Vietnamese startups to realise their dreams. In addition, we are planning to build a joint investment fund, providing comprehensive support from discovering potential startups to investing in a one-stop model,” Hee said.

The parties are also discussing cooperation solutions and exchanging on entrepreneurship and startup education with major universities in Vietnam such as Ho Chi Minh City National University and Hanoi University of Science and Technology, he added.

According to Hee, the DCCEI has a close partnership with the MoST, along with its affiliated agencies, to develop the startup ecosystem in Vietnam. In July this year, Vietnamese Prime Minister Pham Minh Chinh and Minister of Science and Technology Huynh Thanh Dat attended a meeting with relevant agencies in South Korea, where the two sides discussed the direction of cooperation of the startup ecosystem between the two countries.

South Korean businesses and investors are among international players with a growing interest in the Vietnamese startup ecosystem. With that, Techfest last week attracted hundreds of domestic and international businesses and investors as well organisations such as Ether, IMB Vietnam, LG, Brankas, Swiss Vietnam Economic Forum, Austrade, and others.

As part of the event, a forum on Australia and Vietnam business and innovation cooperation was held. The forum aimed to enable Australian technology businesses to better understand Vietnam’s dynamic market and ecosystem, and introduce Australia’s technology capabilities to Vietnamese businesses, thereby forming initial connections towards the digital transformation process.

“Vietnam’s young population is embracing technology solutions. The digitalisation of services is a government and industry priority, creating a wide range of opportunities and making Vietnam an attractive market for Australian technology providers to tap into,” said Jonathan Saw, trade and investment commissioner of Austrade.

“Vietnam’s digital economy expanded by 19 per cent to $30 billion in 2023 and is projected to be worth $120-200 billion by 2030. There is growing demand for ICT infrastructure as well as agritech and digitech solutions in the country, and Australia has the capability to help meet those demands,” he added.

Similarly, Singapore is also seeking to invest in building and growing deep tech startups in international markets, including Vietnam. At Techfest, Hsien Hui Tong, executive director of Investments at deep-tech platform SGInnovate shared, “We supported four unicorns to develop in Vietnam, and now we are more interested in initiatives there. We see that Vietnam’s plans also align with our strategy and we hope to cooperate with Vietnamese partners to invest in the future.”

In 2024, Vietnam’s Global Startup Ecosystem Index increased by two places from 58th to 56th, ranking fifth in Southeast Asia and 12th in Asia-Pacific. The country’s Global Innovation Index has continuously improved over the years. In 2024, it increased by four places compared to 2022, ranking 44th out of 133 markets.

“Thanks to the strong development of the startup ecosystem, Vietnam is emerging as one of the dynamic emerging economies and a development centre for startup businesses in the Asia-Pacific region,” said Minister Dat. “In the era of digital and green transformation, startup businesses will continue to play an important role, accompanying the country in the path of deep integration and sustainable development.”

Despite growing interest, challenges for the development of the local startup ecosystem, including legal barriers, were once again discussed by policymakers, businesses, and experts.

According to Nguyen Ba Diep, vice president of e-wallet startup Momo, innovative and disruptive products and services are not covered by existing legal regulations. In the initial stage, they need the state to support market development by allowing them to provide solutions to the government. Startups’ capital mostly relies on private equity funds.

“Startups need time to grow, so long-term and stable government incentive policies for priority industries are needed, of about 7-10 years. They need practical incentive policies, reducing personal income tax in preferential industries, and a policy mechanism to meet the need for capital to expand scale,” he said. “Startups cannot borrow bank loans because they only have intellectual property, and no collateral assets.”

Similarly, Park Hong Keun, president of LG Innotek Vietnam, said there needs to be a clearer vision for startup development in Vietnam.

“The South Korean government has established and directly manages numerous research and development centres. The outputs from these centres are shared and connected with businesses to transition products from research labs to commercial production. A portion of the profits generated by these businesses is allocated back to such centres, creating a closed-loop system of financial sustainability between the government and enterprises,” he said.

Hoang Minh, Deputy Minister of Science and Technology, admitted that Vietnam’s innovation startup ecosystem is now entering a new stage, expanding and integrating with other innovative startup ecosystems in the world. However, in addition to the achievements, there are still some issues that need to be ironed out.

“There is still not a complete and clear legal corridor for the startup ecosystem and for innovative organisations and individuals,” he admitted. “In legal documents and administrative documents at all levels, concepts, regulations, and terms on startups and innovation are still not used consistently. In many places, policies and guidelines are not implemented accurately and are not effective for developing the ecosystem.”

Pham Thanh Binh, Deputy Minister of Foreign Affairs, added that legal documents have not kept up with international integration in sci-tech and innovation. “There is still a lack of databases of Vietnamese experts and intellectuals abroad, making it difficult to build a network for innovation and technology commercialisation. And Vietnamese people overseas lack information about the domestic startup ecosystem,” he said.

According to Kevin Murphy, CEO of growth strategy consultants J.E. Austin Associates, innovation must now be the top economic priority for Vietnam, which is now facing the middle-income trap.

“World Bank data shows most developing countries hit a plateau and fail to progress beyond the middle-income trap, and investment-led growth is not enough. So the only way to achieve developed country status is through innovation-driven growth,” Murphy said.

Hanoi women embrace business startups with regional specialties Hanoi Women's Union has expedited numerous support programmes, helping more than 5,000 women successfully start businesses in the past six years.

Over 100 startups join business expansion seminar Empowered Startups, a Canada-based startup incubator and foundry, held a consulting seminar on November 30 in Ho Chi Minh City, drawing over 100 startups and industry experts.