Looking back at the past decade, Vietnam has emerged the concept of start-up companies or startup projects. However, these companies haven’t make much impression so far. Within 3-4 years, a “new start-up flow” has actually appeared and made a bold mark. Despite of many difficulties, Vietnamese startup market has been in top 3 thriving startup markets in Southeast Asia, with Thailand and Indonesia. This proves that Vietnamese startup market is full of vitality and potential development.
However, according to the latest study of CB Insights, “Nearly 1/3 of startups fail because they lack capitals, they do not have enough cash to run their businesses. This occurs in companies which are rush to develop”. Lack of capitals is one of the biggest reasons why startups “go slow” or “stop the game”.
In Vietnam, small and medium enterprises (SME) is the most common business structure in our economy. It counts for 97% the number of enterprises in Vietnam, provides jobs for 51% the number of social workers and contributes more than 40% to national GDP … The tax and fee amount these businesses paid to the government increased 18.4 times after 10 years”. These figures indicate the importance and the values which these new businesses bring to the economy. However, it is not all businesses that is lucky enough to have ability to do it. In a survey on 100 startup people, 80% of them failed in the first year of operation. What caused these failures could be the shortage of both knowledge and experience in management, obstacles from the market, and specially lack of capital (30%).
Many small startup businesses hardly approach the loans from established banks. Besides, mobilizing capital from individual investors or venture investment funds is not easy. They are struggling with the situation of lacking money. Whenever any business opportunitie comes, they are not financially strong enough to seize it.
That is why in order to protect and financially sponsor small businesses or startup community, American government encourages the establishment of investment companies, hedge funds in their country.
In Ireland, the Fund of the State Business Association financially sponsors anyone with a good business idea. In Japan, there are many banks specially established for startup businesses. According to Mr. Le Xuan Nghia, Director of the Institute of Economics BDI “the fact that all business entrepreneurs are willing to take risk is the magic ingredient which allows the economy to expand rapidly and generate more jobs. However, the problem is the banks always aim at big companies which no longer worry about capital and ignore new companies, good business ideas which is thirsty of loans”.
Therefore, in Vietnam – where potential startups have begun to develop, there should be a fund which is big enough to support and accompany with start-up businesses.
That is what the “Business Startup Support Fund” and the “Startup Investment and Innovation Fund” were born for.