Start-ups in Vietnam and the failing culture

One year after successfully garnering 5.5 million USD worth of foreign investment capital, The Kafe, a chain of fusion cafés based in Hanoi, has raised its charter capital to 10 million USD from a venture capital fund in Hong Kong. At that time, Dao Chi Anh is seen as one of the most successful start-ups in Vietnam. However, just also one year later, Dao Chi Anh resigned from her post on October 25. The founder of the Kafe group shared her thoughts of the difficulties in using investments at a forum recently.

“Once a business is chosen for investment, the founders are under a lot of pressure from the investors who also want control over the business. Sometimes a founder's wants and desires cannot be fulfilled as they must prioritise investors' needs. I was under high pressure to live up to their expectations, and actually I did. However, there was a lot of trade-off. Compromises happen, but you won't know to what extent until you experience it”, said Dao Chi Anh - founder of the Kafe Group.

2015-2016 marked a new era for the start-up community as it reached a record high of 94,000 businesses established. At the same time, however, nearly 70,000 of those went under. Meanwhile, on a global scale, nine out of ten startups fail, according to Forbes. According to Blake Nichols, Director at ENVOI - Enterprise Network of the Vietnam Oregon Initiative, there are several main reasons for startup failures.

“As company started small, one or two champions pushing it forward. They understand the vision, they've been there from the beginning when people told them they not gonna succeed. But as company grow bigger, it gets more complicated, they hire more people, it's difficult to hold tight to that vision. Another issue is planning the company. I see a lot of company they have an idea, they run out it but they haven't done it. They haven't look at grow strategy, how they gonna attract their finances, in flows, out flows, so that can set them up for challenges in the future”, said Blake Nichols - Director of ENVOI.

Since Vietnam has been listed as one of the most attractive host countries for foreign investment with the boasting over 1500 startups, it's necessary to implement startup support programs in the country to avoid risks for young start-ups. Earlier this year, Deputy Prime Minister Vu Duc Dam approved a decision that aims to construct a Vietnamese startup ecosystem from now until 2025, also referred to as Program 844.

“Every country has its own startup ecosystem and development program, with Chile, Israel and Singapore having programs we'd like to emulate. We are so happy that Program 844 is one that Vietnam can be proud of”, said Phan Vinh Quang - Vice Director of Mekong Business Initiative.

“In the first stage, the State will take the lead. After the system has formed the basic knowledge and legal system, the State will limit its intervention by creating favourable conditions and giving support. This is the only successful path”, Nguyen Quan - Former Minister of Science and Technology.

Sink or swim is probably the most frequently asked question to startups. However, even failures can bring them experiences. Besides, with the support from the government, Vietnam is hoped to build a startup ecosystem where failures do not paralyze startups from starting with new projects.