Without the existence of capital ventures, may be there would be no Silicon Valley in the US. Recognizing that capital is a pre-requisite for the success of any start-up business and in view to promote innovation and make Vietnam an entrepreneur nation, a draft legislation is currently submitted by Vietnam’s Ministry of Planning and Investment to public review with the aim to make easier and simpler the set-up, management and operation of venture capital funds.
Basically, with this new legislation:
- Venture capital into start-ups is defined as investment with high level of risk either through loans or equity stake in view to launch and develop a business in its early stage for its potential and which is not yet profitable.
- The time needed to launch a venture capital fund would be minimum, only three days
- The existing regulations on the securities investment funds (eg. have a minimum capital of VND50 billion or US$2.2 million or at least 100 investors) would not be applicable to the operation of a venture capital fund. A venture capital fund however would not be allowed to borrow money for investments.
This should contribute to accelerate the development of start-ups and SMEs in Vietnam particularly in the industries such as IT, medical industry.. .where the country has significant competitive advantages.
Today the number of capital ventures dedicated to SMEs in Vietnam is very limited (eg. FPT Venture). Most of the other funds, coming from the banks and the large State-owned enterprises, target mainly large projects for established companies.
Some foreign funds have a representation in Vietnam (eg. CyberAgent , 500 Startups, Golden Gate Ventures) but the number of transactions is limited, about 10 per year currently.