These are the two reasons for the poor growth of Vietnamese startup ecosystem. Why Vietnam is not able to attract foreign venture funds? “It is the lack of mechanisms for divesting”, said Tran Huu Duc, Director of FPT ventures.
In Israel, under a startup support program, foreign investors came to form venture funds in Israel and helped to create successful businesses in the country. The government also formed an investment fund with 100 million USD in 1993. After 5 years, as the venture market became stable, the Israeli government privatized the funds.
“Venture capital should be considered a source of finance for businesses and should be legalized. However, this still doesn't exist in Vietnam. It’s too risky to use 100% state budget as venture capital, but it’s possible if we use only 20-30% of state budget as seed capital. When the businesses are developed enough, the government can divest then”, said Dang Huy Dong, Deputy Minister of Planning and Investment.
Vietnam is the third largest start-up ecosystem in South East Asia, only after Singapore and Indonesia.
