The Ho Chi Minh City Department of Science and Technology (DST) is finalizing the model with expert input before seeking approval, as discussed at a workshop on developing the city’s startup community last week.
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| Metropolis strives to instill confidence in new startups, Illustration photo/Source: freepik.com |
Phan Thi Quy Truc, deputy director of the DST’s Intellectual Property Management and Innovation Department, explained that the capital swap was proposed to invest in seed-stage startups.
Taking inspiration from various international sources, the model features a transparent legal framework, including operational regulations, fundraising procedures, participant rights and responsibilities, and dispute resolution mechanisms.
“This transparency is crucial to instill trust among both startups and investors,” Thuc said at the workshop, emphasizing the importance of an advanced, secure technological infrastructure to protect data and process large volumes of transactions accurately and efficiently.
Effective risk management is another pillar of the model: “Qualified personnel assess the capabilities and development stage of startups, identify risks and strive to minimize investor losses while eliminating fraudulent activities,” Turuk noted.
She also stressed the need for a comprehensive and up-to-date information system on startups and fundraising projects. “The system will provide investors with detailed information, help them evaluate potential projects and determine investment risks,” she added. In addition, the platform will provide a range of services and support, including legal, financial and marketing advice, to connect startups and investors and create a supportive environment.
Bambu UP CEO Nguyen Huong Quynh warned against excessive regulation that could hinder the platform’s openness.
“The government should set rules and conditions based on legal regulations, but too many regulations may make it difficult to access the platform. The government should certify the operating principles and allow private companies to operate the platform under a market model with voluntary participation of stakeholders,” she said.
Bui Thi Thuy Tien, director of the Vietnam Startup Incubator, stressed that risk management is the most important aspect of the platform as it directly affects investors’ profits. “The exchange needs to assess the potential, product value, company valuation and execution capability of startup projects, build investor trust and outline future profit and repayment plans so that investors can have confidence in funding the projects,” said Tien.
Nguyen Viet Dung, director of the Ho Chi Minh City DST, acknowledged that attracting social capital to the innovation and start-up sector is difficult, saying this is due to a cultural hesitation towards risk and venture capital investment.
“It’s clear that social capital is abundant, but the challenge is attracting it to the innovation startup sector. Startups need to further build trust with investors,” he said. “Startup capital exchanges require input from all stakeholders in the ecosystem. This input will be the basis for developing a comprehensive proposition while ensuring that the model complies with existing legal frameworks. The operating model must comply with current legal regulations.”
Developing a vibrant startup ecosystem is essential to foster innovation, a key driver of economic growth.
Tran Tran, project manager at Vingroup Innovation Fund, echoed this sentiment, pointing to significant policy and legal barriers to commercializing products from academic research.
“Researchers at academic institutions face significant challenges in commercializing their products,” she said. “Despite ongoing efforts to remove these barriers, it remains difficult for researchers to found companies or startups to commercialize their products. This situation limits the culture of innovation and entrepreneurship within universities.”
Regarding legal barriers to commercialising products, Pham Tuan Hiep, director of the BK Holdings incubator, said many of the researchers are employees of public universities, which means they are legally prevented from taking on directorships or other positions in the companies they help set up.
“This is a major obstacle that must be resolved to foster a more innovative environment. Another challenge is the mixed ownership of research results, including ownership by the public institutions and universities where researchers are employed. The process of assessing, valuing and transferring these mixed ownership assets to startups is very complex,” Hiep explained.
Meanwhile, Moon Min, managing director of Next Challenge Foundation, a South Korean startup support organisation looking to enter the Vietnamese market, pointed to certain regulatory and legal barriers.
“The Vietnamese government is keen to attract more high-tech and green companies, but existing regulations and laws can pose challenges for businesses in terms of understanding and compliance. This poses a major barrier for companies wanting to do business in Vietnam,” she said.
Vietnam is becoming an increasingly attractive country for investors due to its expanding innovation ecosystem. Minh noted that in South Korea, the government has consistently supported universities to educate students on innovation and entrepreneurship, helping them understand business practices to make a positive impact on society. Despite a wealth of innovation, South Korea still faces complex social issues.
“Even with strong development and ample preparations with technology and ideas, the Korean market remains highly competitive,” Min said.
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