Even angel investors are experiencing a hard time, with little legal support for their activities in Vietnam. Angel investors contribute their capital to a startup company, and in return, they own a share of that company.
Many angel investors have launched start-ups themselves, they understand the challenges start-ups face. As only 1 out of 10 start-ups grow to be successful, so choosing to invest in start-ups is a risky decision.
"Investing in start-ups is still new in Vietnam so there is a lack of regulations, particularly when protecting the stake held by angel investors in business", Le Dac Thinh Dong - an angel investor - said.
"Investments in start-ups are much riskier than investment in gold, real estate or shares. And we also need more policies to encourage investment", Pham Quoc Dat - co-founder and director of Hatch Programme - said.
Foreign investors also encounter challenges when making investments in Vietnam. According to Hajime Hotta, a Japanese businessman, 6 Vietnamese start-up projects that he is investing in are required to register in Singapore. Limitations in regulations are leading to brain drain in Vietnam’s newly-developing start-up ecosystem.
"We face difficulties regarding legal issues, especially due to Vietnam’s investment law. Investments in Singapore are much easier than in Vietnam, and also less costly", Hajime Hotta - another angel investor said.
"The investment required for start-ups in Vietnam is relatively high. Related procedures are also complicated. The government is trying to simplify administrative formalities, which would also reduce the cost of initiating a startup project", Pham Hong Quat - Director of Market Development and Science and Technology Enterprise Department, Ministry of Science and Technology - spoke.
Programmes are being launched to foster the development of start-up companies and there is a project to draft circular on venture capital for start-ups.
