Fundraising for innovative startups

Mr. Pham Hong Quat- General Director of National Agency for Technology Entrepreneurship & Commercialization (Ministry of Science and Technology)

Mr. Pham Hong Quat said that innovative startup is seen as one of the key drivers of economic development, which helps Vietnam shift cheap labor and natural resources-backed economic model to a productivity and innovation-based new one.

- What does the phrase "creative startup" mean, sir?

In project 844 (National Innovative Entrepreneurship Ecosystem Support Scheme to 2025) defines the innovative startup as a startup model based on the exploitation of intellectual property, new technology, and new business models.

In the context of fast-growing technology, the innovative startup will help speed up innovation-based economic growth. The term “startup” or “innovative startup” resulted the technological revolution, internet, mobile phone, digital transformation, artificial intelligence (AI), blockchain, big data, virtual reality technology (AR/VR)...

Therefore, traditional business models backed by tangible assets such as factories, cheap labor, and natural resources will be gradually replaced by new technologies and intellectual property-based ones. In the coming trend, all countries are going to trigger strategies to accelerate innovative startups associated with digital transformation, digital economy, and the 4.0 revolution.

- For a successful innovative startup, how do individuals/ businesses need to start, and which path to go?

Successful innovative entrepreneurship models in the world often start with a big problem called "finding out the pain of the customer". What are the problems of enterprises, society, and state authorities? Can such problems be solved with new technology solutions, new business models? Once these problems are discovered, people will carry out test models so that a new business model can be marketed and tested many times until it is accepted by the market. So, "lean startup" or Canvas model is to find out the "pain of the market" to solve.

- Mobilizing resources and creating a breakthrough in building an innovative startup ecosystem have been facing many difficulties. In your opinion, what motivations and models are needed to best assist in building an innovative startup ecosystem in Vietnam, sir? 

The human resource will play a major role in innovative entrepreneurship because the latter is based on intelligence, creativity. The startup ecosystem also needs to build up a network of the best experts and advisors to support startups. Successful startup ecosystems are those that have mentors, technologists, investment and market experts, coaches, and successful entrepreneurs.

People help the people- the better such interaction is, the faster and more sustainable the startup ecosystem will develop. Many countries have selected technology advisors in research institutes, domestically and abroad- based universities, especially those who have studied and worked abroad. Such human resource is negligible in Vietnam. Vietnam’s successful businessmen have not spent as much time as those in other countries on the startup ecosystem.

For example, in Israel, right after 5 minutes of seeking a mentor on the internet, there will be at least one volunteer to help solve all matters such as technology, business model, market connection, access to capital. That enables Israel’s startup ecosystem to have a very high level of interaction and valuable information sharing. If an entrepreneurship ecosystem where actors are not ready to share will face many difficulties. Attracting overseas Vietnamese people will be very good for our startup ecosystem to develop in-depth.

- In terms of policies, do many countries encourage corporations to participate deeply in the innovative startup ecosystem, sir?

Currently, we also allow businesses, including state-owned ones, to set up a science and technology development fund. Although this fund is also stipulated in the Law on technology transfer and the Decree guiding the enforcement of this Law, the use of this fund for innovative startup projects has not been implemented yet. If this funding is triggered, it is also a very good source of support for the startup ecosystem.

Singapore has issued initiatives to launch open creative platforms, online innovation networks. Thereby, corporations bring up their challenges to be solved by creative startups, universities, institutes. After that, good solutions will be supported by advisories and technologists until the project is completed and used by the said corporation.

Shinhan Bank Group of Korea has been implementing the project "Shinhan Future's Lab", which not only serves Shinhan, but also other Korea- based corporations by appointing CEOs, managers in business, finance, engineering to go hand in hand with innovative startups. Right after the success of a startup business, that corporation will help it access venture funds. And if Vietnam has also an open creative platform and corporations join hands to give challenges and support startups, it will effectively push up the development of the startup ecosystem.

- In fact, many Vietnamese businesses have built their own study institutes and innovation centers. How do you evaluate this activity?

The said reality is really good, showing that corporations have been aware of investing in future generations. Nowadays, they often present their problems to be solved by startups, not by their officers. If that model was replicated, would boost the startup ecosystem.

In the coming time, I believe that with the State's incentives, corporations will join more and more the entrepreneurship ecosystem. Corporations need to take a more open-minded approach, not only within their own sector, but also in areas where they can link to venture capital funds.

- The policy framework for innovative startup investment in Vietnam is not yet clear. What are your recommendations to promote investment in innovative startups in Vietnam? 

The Law on support for SMEs and Decree 38/2018/ND-CP guiding the enforcement of this Law is considered the initial corridor for venture investment. However, there are still many hurdles in the enforcement of these regulations. Large-sized venture capital funds have not yet access innovative startups. So, these regulations should be amended in line with the actual situation.

At the moment, many countries have accepted the model of fundraising individuals, society, and crowdfunding. So, Vietnam should soon shape these models. Resources enterprises, especially state-owned ones, as well as science and technology development funds, need to be more open.

Thank you so much!