Cooperation between VC and start-ups in Vietnam strengthened
During a webinar on May 14, experience in attracting investment funds for start-ups is shared by experts.
Answering a question by Vietnam Economic Times during a webinar entitled “Why Founders Need VCs: Startup Success Insights in Vietnam” on May 14th, Ms. Laura Nguyen, a partner at GenAI Fund - which invests in AI-first technology companies in Southeast Asia, pointed out 2 main barriers that are affecting Vietnamese start up’s ability to reach funding from venture capital (VC) firms.
Founders need to think globally to attract VC funds
Generally speaking, when VC funds are looking for start-ups to invest in, their founders are among first factors to be considered.
“Does he/she has the relevant experience to build the product? Any VC will be looking for start-ups that can serve a larger market. A start-up can choose to serve either the Vietnamese market or a global one. VCs will be looking at the founders to see if they have the experience and customer insights to turn their start-up into a global company”, Ms. Laura Nguyen stated at the event organized by The Founder Institute Vietnam.
“A lot of Vietnamese start-ups will feel this is a bit challenging as they may lack the relevant experience to build a product that can serve global customers as well as the necessary global or regional network to bring their product to other countries”, she added.
Agreeing with Ms. Laura Nguyen, Mr. Tran Hieu, founder and CEO of TopCV - a rising human resource tech company, stated that small scale of the Vietnamese market, in terms of human resources, was not appealing to regional investors.
“They ask me how do you turn your start-up into a unicorn if you only focus on the Vietnamese market. This was a very hard question for me”, he shared at the webinar.
The second barrier identified by Ms. Laura Nguyen is the difficulty in keeping up with the latest technological trends of the world.
“We are in a start-up war where technologies and things can change or update very quickly. Barring certain sectors such as gene research, if you don’t update yourselves, you’ll be outdated”, she emphasized.
“Companies need to keep up with the latest innovation in the US or Europe. You will have a better chance of succeeding if you’re one of the first start-ups to implement these innovations”, Ms. Laura Nguyen advised.
Necessary support for success
Despite these barriers, both experts agreed that most start-ups in Vietnam need the support from VC funds in order to achieve true success.
“A start-up’s journey is never easy or sweet. Because of this, you’ll always need support, one of which is financial assistance. You need money to fund your company at every stage from paying for salaries, rent as well as expansion of business activity”, Ms. Laura Nguyen pointed out.
According to the representative of GenAI Fund, beyond the financial benefits, investments from VC funds can be seen as a “stamp”, guaranteeing the reputation of a start-up and the quality of its product.
“In order to receive funding, each start-up has to go through a due diligence process, during which the VC and any investor will check your business”, she analyzed.
Agreeing, Mr. Tran Hieu pointed out that investments from VC funds can serve as a guarantee for start-ups to attract additional capital from following fund raising rounds.
Investment firms can also provide much needed advice and counseling to start-up founders on how to develop and expand their business. “When expanding to a new market, you will need a mentor to connect you to the right person or support. Each of these connections can save thousands to hundreds of thousands of dollars”, Ms. Laura Nguyen stressed.
Building a sound business model
During the webinar, both Mr. Tran Hieu and Ms. Laura Nguyen stressed the importance of building a sound business model in order to attract funds from VC.
“It is easy to raise funds from VCs once you have a strong business model with revenue and can scale up your business to make more profit”, the founder of TopCV stated.
Besides building a strong business model, Mr. Hieu Tran also advises start-ups to choose VC funds that are suitable for their field of operation.
“Not all VC funds are suitable for your company. You need to be able to choose the right one”, he stated.
