Notably, the country's venture capital indexes are showing an extremely positive development trend as the number of venture capital deals has jumped by 27 places, ranking 50th out of 133 countries and economies.
The number of deals receiving venture capital has increased by 10 places to 44th out of 133 countries and economies.
Under the Global Innovation Index, the venture capital deal index is part of the Market sophistication pillar. The more venture capital deals, the higher the score and ranking of the global innovation index.
Experts in innovation assess that a high ranking in venture capital indicates a shift in economic structure from a traditional model to a rapid growth models with large profits and economic development based on science, technology, and innovation.
Global and Vietnamese practices show that investors and venture capital funds play a dominant role in financing innovative start-ups. A crucial factor determining the success or failure of innovative start-ups is their access to funding.
From an investor’s perspective, Pham Ngoc Huy, Managing Director of Lotte Ventures Vietnam Investment Fund, said that the 27-place increase in the number of venture capital deals shows domestic and foreign investors are increasingly interested in the Vietnamese market, recognising the development potential of start-ups, especially in the fields of technology, e-commerce, and digital solutions.
Similarly, a report from Bain & Company stated that Vietnam leads Southeast Asia in attracting long-term investors. Surveys indicate that investment activity in Vietnam is expected to increase by 83% from now until 2030.
In addition, the increase in the number of venture capital deals affirms that the investment environment has improved. Pham Ngoc Huy commented that the support policies from the government, especially Decree No. 38/2018/ND-CP with detailed regulations on investment for small and medium-sized innovative enterprises and start-ups, have created momentum for the establishment and development of creative start-up investment funds in Vietnam, contributing to an increase in deal numbers.
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| At a high-level policy forum on creative startups held in the northern port city of Hai Phong in November as part of National Innovative Entrepreneurship Day (Techfest Vietnam) 2024 (Photo: VNA) |
According to statistics from the BambuUP innovation platform, there are currently about 210 venture capital funds operating and investing in innovative start-ups in Vietnam.
Of these, nearly 40 domestic investment funds were established under Decree 38 with total charter capital of more than 100 billion VND (4.1 million USD). The number of angel investors, although not too large, is also gradually increasing.
The increase of 10 places to 44th in the number of deals receiving venture capital not only reflects quantity but also demonstrates improved quality among start-ups. Many start-ups have clear business models, strong founding teams, and good adaptability to market trends. Furthermore, this index indicates that Vietnamese start-ups are increasingly connected with international investors, helping them secure funding and gain valuable experience from more developed markets.
Statistics from the National Agency for Technology Entrepreneurship and Commercialisation Development, under the Ministry of Science and Technology (MoST), Vietnam currently has about 3,800 start-ups.
Among them, eleven are valued at over 100 million USD and three are valued at over 1 billion USD, namely Momo, VNG, and VNLife.
Vietnam is currently the third pole in the Southeast Asian start-up golden triangle, along with Singapore and Indonesia; having the perfect combination of leading technology talent, and an existing innovation culture, which is highly attractive for global investors.
From a regulatory perspective, Pham Hong Quat, Director of the National Agency for Technology Entrepreneurship and Commercialisation Development, believes that improvements in venture capital indices result from close and decisive government leadership as well as involvement from ministries, localities, and the scientific community.
Notably, the synchronised implementation of Decision 844/QD-TTg (2016) on approval for “assistance policies on national innovative start-up ecosystem by 2025 has significantly contributed to enhancing rankings and indices related to venture capital. This initiative has helped refine legal policy frameworks, train approximately 25,000 individuals and organisations within the ecosystem, support around 2,000 innovative start-up projects and enterprises, connect with major international partners like ADB, UNDP, and World Bank, attracting diverse social resources for angel investments into the ecosystem.
Policies promoting green economy models and circular economies have also attracted investment into green technologies and innovative start-up events, including the National Innovative Entrepreneurship Day (Techfest Vietnam).
Looking ahead at future venture capital trends, Pham Ngoc Huy stated that it truly is a “golden time” for both start-ups and investors in Vietnam as new opportunities are emerging in the market.
Recognising this potential, Lotte Ventures was established as Vietnam's first foreign-invested fund under the Vietnamese Government’s Decree No. 38. Lotte Ventures aims to serve as a model for large global corporations investing in Vietnam. This trend promises to foster sustainable development for both start-ups and Vietnam's economy moving forward.
If venture capital indices continue to be improved, Vietnam could become one of Southeast Asia's most attractive destinations for venture capitalists.
Pham Ngoc Huy, Managing Director of Lotte Ventures Vietnam Investment Fund
“If venture capital indices continue to be improved, Vietnam could become one of Southeast Asia's most attractive destinations for venture capitalists,” Pham Ngoc Huy emphasised.
The increase in venture capital will contribute to creating a stronger start-up ecosystem with new investment funds emerging alongside start-up acceleration programmes and other support organisations.
To further enhance venture capital indices going forward, Pham Hong Quat suggested that besides strengthening supportive policies for innovative start-ups, efforts should continue to improve the “Institution” pillar by prioritising unification and legalisation of issues such as budget fund usage policies for innovation investments and clear definitions regarding innovation concepts related to start-up activities.
According to Le Anh Thach, founder of Vietnam Silicon Valley Foundation, it is essential to encourage private sector support for establishing a Venture Capital Association that can advise the government on these matters while attracting foreign investments.
