Unlocking market, unleashing capital sources

Over two decades of laying the foundation

Although the earliest components of Viet Nam’s start-up scene began to emerge in the early 2000s, it was not until after 2010 that the innovative start-up ecosystem truly took shape and was officially recognised in government regulatory documents. Between 2013 and 2015, the Government began laying the groundwork for a legal framework to develop the science and technology market, aiming to create favuorable conditions for a new generation of highly creative enterprises to grow, explore, and expand both domestically and internationally.

In 2016, the Prime Minister issued Decision No. 844/QD-TTg, approving the Project on supporting national innovative start-up ecosystems until 2025. This was the first official document in Viet Nam directly related to start-ups. Since then, alongside state policies targeting the development of a knowledge-based economy aligned with the Fourth Industrial Revolution, innovative start-ups have continued to rise as a major trend, flourishing across nearly all industries and sectors.

In reality, from the very outset of engaging with the concept of a “start-up ecosystem”, the country has been confronted with a host of complex issues that any individual or organisation attempting a start-up might face. These include a barrage of difficult questions: What should the product be? What market to enter? Where is the capital? What technology to use?... However, grappling with these questions laid the foundation for a fundamental understanding of a sustainable start-up ecosystem, comprising several key components.

Firstly, start-ups are the driving force of innovation, creating breakthrough technologies and products. Secondly, investors, including angel investors, venture capital (VC) funds, private equity (PE) funds, and major institutional investors, play a vital role. Thirdly, large technology corporations (Big Tech) act as strategic partners and investors. Fourthly, the capital market enables start-ups to raise funds from the public, ensuring liquidity and long-term development. Fifthly, universities, research institutes, and incubators provide mentorship, foster connections, promote applied research, and support fundraising. Sixthly, policy-making bodies and state management agencies are essential in issuing regulations and establishing a conducive legal framework for all parties involved.

Following a developmental phase, data from the Ministry of Science and Technology indicates that Viet Nam’s innovative start-up ecosystem has grown from around 1,800 start-ups in 2016 to approximately 3,800 today.

The proportion of start-ups that have survived and scaled up validates the view held by many experts: fewer than 1% of start-ups succeed and evolve into Big Tech companies, but when they do, the economic impact is immense. These enterprises not only generate products and services for the economy but also catalyse broader market linkages, construct value chains, and lay the groundwork for the next generation of start-ups to develop and thrive.

Time for breakthroughs

After more than two decades of successful incubation, the first generation of Vietnamese start-ups has grown into Big Tech companies with the potential to compete on a global scale. But does nurturing a new generation mean waiting another 20 years? It is not necessary in reality because the current socio-economic landscape is markedly different. Through practical experience and policy feedback, the obstacles hindering the development of science, technology, innovation, and digital transformation have been clearly identified and have been being addressed through concrete measures, as outlined in the Politburo’s Resolution No.57-NQ/TW.

Moreover, major corporations in general and Big Tech in particular, such as FPT, VNG, MoMo, and VinGroup, are playing a crucial role in enriching the “nutrient base” needed for the start-up ecosystem to flourish.

Big Tech companies are increasingly integrated with other components of the ecosystem, forming a cohesive value chain. For instance, their presence enables start-ups to tap into high-quality human resources, offers potential for mergers and acquisitions, and provides access to service platforms developed by these larger players.

In addition, investors will pour investment only when there is a visible path to capital recover, typically through mergers and acquisitions deals with Big Tech or subsequent initial public offerings (IPOs). In turn, these M&A activities often serve as a catalyst for the emergence of new start-ups.

Experience from developed countries shows that, following the initial incubation phase, large domestic technology firms hold a pivotal position within their nation’s start-up ecosystems. Big Tech firms establish the technological platforms and market standards upon which many start-ups can develop their own products and services. For example, the cloud computing ecosystem in Seattle (the US) flourished thanks to Amazon’s presence, which later attracted Google and Facebook to open offices in the city, triggering a wave of cloud start-ups.

In the context of Viet Nam today, the most immediate and practical form of support from state management agencies is the creation of appropriate mechanisms and policies that enable pioneering tech firms like MoMo and VNG to leverage their experience, not only as investors but also as mentors and partners to start-ups. This will create a “synergistic” effect, as capital, knowledge, and experience from the earlier generation converge to drive forward the core of the new economy.

After two decades of trial and growth, Vietnamese start-ups now on the path to becoming Big Tech are ready to stand alongside the State to support the ecosystem of science, technology, innovation, and digital transformation in this new era. However, these very companies are also in need of genuine policy support to unlock capital from financial markets. Recent capital market management policies have proven effective by both mobilising social resources and filtering participants—ensuring that only transparent and “healthy” businesses gain access. However, these stringent regulations are inadvertently creating steep hurdles for tech companies, which operate under unique business models. In fact, many developed countries have already introduced tailoured policies to support this specific group. The question now is whether Viet Nam’s regulatory bodies are ready to “unlock” the market and unleash capital flows to help start-ups break through.

With the foundation laid by Resolution No. 57-NQ/TW and the strong commitment from leadership that it reflects, the time for breakthrough is undoubtedly here, ushering in a new era for the country.