Wednesday, September 19 2018

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Investment for start-up enterprises just begins

Update: August, 22/2018 - 09:00
Phan Hoàng Lan. — Photo baohaiquan.vn

Phan Hoàng Lan, Head of Planning and Finance of the Ministry of Science and Technology’s National Agency for Technology Entrepreneurship and Commercialisation Department, talks to Hải quan (Customs) newspaper about investment for start-up enterprises.

What programmes are the National Agency for Technology Entrepreneurship and Commercialisation Department (NATEC) working on to support innovative start-up business?

In 2013, NATEC was assigned by the Ministry of Science and Technology to assist the implementation of a technology commercialisation project which follows the Silicon Valley model in Việt Nam. Since then, we have had access to start-up enterprises looking for investment and quickly put them into training programmes. After three months of training, they had access to domestic and international investors and received the right investment packages. From those, we had proposals to submit to the Government to have the scheme to support creative entrepreneurial ecosystem. As a result, there is a project to support the national creative entrepreneurial ecosystem until 2025, which was approved in 2016.

Since then, we have often met, frequently looked for start-up activities, listened to the need for enterprises to have policy recommendations accordingly.

What are the specifics of investing in innovative entrepreneurs that means we must develop a separate policy for this activity?

Perhaps the most peculiar is the risk, the unpredictability of this investment. People often say that out of 10 investment businesses, nine would die, and no one would have guessed who would succeed. Therefore, those who invest in start-up business must know well about start-up and must have money to invest.

Firstly, in terms of capital, the initial stage of investing in business - incubation - will take from US$5,000 to $10,000. But if you only invest in an enterprise, the probability of loss is very high, so if investors have money, they will invest in 10-20 enterprises. They must have money and experience

Secondly, if the investors are investing without people to share the risk, it will be hard for them to participate in this market. So normally there will be policies, support, risk sharing for investors, including tax policies and policies on reciprocal investment from the State to the private sector.

Do you think that due to the risk factor that most of the investment funds for start-ups today are funded from overseas with strong and experienced capital?

This is true. Firstly, foreign funds have a lot of experiences in terms of investment. Secondly, they have a huge amount of money. Meanwhile, the investment for start-ups in Việt Nam is very new, so experience, as well as knowledge about investment for start-up, are limited.

In addition, the policy framework for innovative start-up investment was approved in March this year. Policy incentives such as tax incentives, reciprocal investment and other issues are just at initial stages. Therefore, investing in innovative start-ups in Việt Nam is just beginning. And in my opinion, new policies and those to come will promote this capital market.

While reaching out to startup businesses, what changes do you think are necessary to improve the support for businesses?

The start-up policies in Việt Nam are still very new and to complete the legal framework as well as support policies, it will also need two to three years. For example, funding for start-ups is currently just funding research and development related activities. As for market research and export abroad, there are currently no support policies. There are no investment tools, and investment models such as the call centre for community capital, or the IPO floor dedicated to start-up, policies for angel investors yet. Therefore, the market is lacking of policy frameworks. However, ministries are actively studying and proposing to the Government to consider and decide on new policies.

What are the risks faced by start-up businesses when accessing funds from foreign investment funds?

The globalisation of investment for start-ups is a trend not only in Việt Nam but also in every country because not all countries have the capacity to invest much for start-ups. As we see in the world there are a series of billion dollars start-up businesses. Such money in developing countries like Việt Nam will be very difficult to obtain. It is inevitable to attract foreign capital into Việt Nam and that should be encouraged.

I can not call it risk, but the difficulty and difficulty here lies in the capacity of the start-up business and the policy system that accompanies this process. In particular, how to easily attract foreign investors that is what we need to focus. — VNS

 

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