The Ministry of Planning and Investment is drafting a law to legalize the legal framework to catch up with the wave of venture capital, making Vietnam a starting country new business.
The Ministry of Planning and Investment is developing a draft Circular guiding the establishment, management and operation of Investment Funds insurance for creative startups in Vietnam (start-up). Accordingly, the procedures for establishing a fund are minimized, it takes only 3 days to set up a venture capital fund in Vietnam.
Venture fund is a fund formed from the capital contributed by members to make venture capital for creative start-ups. This fund does not have to comply with legal regulations governing investment activities of securities investment funds.
“Investing in this fund is only suitable for individuals and organizations willing to accept high risks from the fund’s investment. Individuals and organizations investing in this fund should consider carefully before making capital contributions, investment decisions, “the draft stated.
The new draft of the Ministry of Planning and Investment has contributed to establishing a legal framework and facilitating capital flows into Vietnamese start-ups.
Accordingly, to mobilize capital into Vietnamese start-ups, the fund is mobilized from various sources including domestic and foreign investors’ capital. water, trust capital. The Fund may raise capital through additional mobilization from existing members or new members, however it is not allowed to borrow to carry out investment activities.
After establishing a venture fund, members will elect a representative called a fund manager. The distribution of profits will be calculated on the amount of capital contributed by each member.
This draft is given in the context that the start-up wave in Vietnam has started to become more robust and there have been some successful models by calling foreign capital from venture capital funds. However, most of Vietnam’s start-ups still face difficulties in capital. Therefore, this draft is said to have legalized, facilitated capital flows into start-ups with the simplest procedures.
Actually, start-ups in Vietnam today mainly mobilize capital from “angel investors”, ie individuals , organizations that specialize in investing in start-up businesses early, when they are not profitable, are even just ideas and have no products …
Enterprise Development Department (Ministry of Planning and Investment) said that through practical surveys, there are many angel investors. the need to contribute capital to form a venture capital fund for creative startups. However, in order to establish an investment fund such as a model of securities investment fund in accordance with the Securities Law, the conditions for establishment are too high and strict that small-scale investors cannot meet. For example, the fund must have at least 100 investors, the total fund value must reach VND 50 billion, …
Meanwhile, with start-ups these angel investors only need to contribute a capital of US $ 5,000-50,000 to turn the creative idea of Some individuals become products and services with high added value and fast growth. Therefore, it is inappropriate to apply the provisions of the Law on Securities to a startup venture fund and discourage the capital contribution to establish a venture capital fund for start-up.
The Enterprise Development Department thinks that a successful start is always a prerequisite for any start-up. However, with the big risk nature of start-ups, traditional capital mobilization channels such as bank loans are almost impossible, so it is important to call for investment capital for start-ups.
“Venturing into a start-up is to provide resources to successfully nurture innovative ideas. In the world, The venture capital market for start-ups has developed many years ago and is very exciting, but in our country, this activity has just started to emerge recently, “the Enterprise Development Department said.
Accordingly, the number of domestic and foreign investment funds for creative startups in Vietnam is very small. Foreign funds like CyberAgent, 500 Startups, Golden Gate Ventures … currently only open representative offices in Vietnam. Some investment funds of big banks and companies such as Vietcombank, BIDV, VPBank, VietA bank, Petroleum Corporation have investment activities for enterprises.
However, most of these funds do not invest in the early stages and do not make small investments but only invest in regular projects. several hundred thousand dollars and often buy stocks and bonds with market capitalization. The establishment and operation of these funds were previously in accordance with the Securities Law. Among FPT’s domestic funds, FPT Venture currently has funds that are actively implementing venture capital for start-ups.
On average, only about 10 Vietnamese startups receive investment from these investment funds each year. Meanwhile, the demand for start-up capital is huge, in fact, many Vietnamese start-ups have established companies in foreign countries such as in Hong Kong or Singapore … to be able to call capital. more convenient.
The Enterprise Development Department believes that a complete legal framework is needed to create a professional playground for venture capitalists. From that, it will further promote investment resources, especially investment from the private sector for start-up.
“The global trend as well as the practical requirements of our country’s socio-economic development show that economic growth cannot be based on old advantages such as natural resources and cheap labor that are gradually eroded, which need to be based on innovation, it is the force of start-ups that is one of the new driving forces of the process of model innovation. to increase and restructure the economy, promote the national economy to develop autonomously and sustainably, “the Enterprise Development Department evaluated.
Stories about the start-up country Israel has built a spirit of private business around the world. Facebook, Apple, or Uber are start-ups that have changed the world.
Recently, at the workshop to improve national competitiveness and innovation, development, PhD. Nguyen Quoc Toan – Deputy Chief of the Central Economic Office said that “it is time for a new creative boom in business. We need to try harder and need more startups”.
According to him, it is necessary to set up investment funds for start-up enterprises under the model of public-private cooperation under the Government, investment funds insurance to call for investment capital, funding for potential innovative innovation projects.
Deputy Prime Minister Vu Duc Dam also said that Vietnam wants to become a startup country, the entrepreneurial spirit must be a keyword in every forum, crept up so that the small community spread to the whole society. “Starting a business does not need to be big, the most important thing is that everyone must apply science and technology, be creative to make the country richer. I want to step out with you to create community, nursery so that Vietnam of the next generation can dig deeper, “said Dam.
(According to Vnexpress)