Finance and beyond support for Vietnam's startups

Vietnam currently has more than 3,000 active startups, with Ho Chi Minh City accounting for nearly half of the total, mainly concentrated in digital technology, e-commerce, fintech, logistics, and creative services. However, domestic financial institutions dedicated to venture capital remain limited in both scale and number, making it difficult for many promising projects to access funding at the seed and early stages. 

In this context, the Ho Chi Minh City Venture Capital Fund was officially launched on April 17. Operating as a joint stock company under the Law on Enterprises, the Fund, formally named the Ho Chi Minh City Venture Capital Investment Fund Joint Stock Company (HCM VIF JSC), is expected to help narrow the existing “funding gap” for startups. 

Structured under a public-private partnership (PPP) model, the Fund has initial charter capital of some $20 million, with 40 per cent, or around $8 million, contributed by the city budget as “seed capital” and the remaining 60 per cent, or about $12 million, mobilized from private investors, enterprises, and financial institutions. This structure not only provides financial resources but also sends a strong market signal, helping catalyze broader participation from both domestic and international capital while promoting a market-oriented investment approach with controlled risk-taking. 

Ripe moment

According to Mr. Lam Dinh Thang, Director of the Ho Chi Minh City Department of Science and Technology, the Fund is designed as a strategic policy tool to advance the city’s innovation ecosystem, while investors contributing capital expressed expectations that it will go beyond financing to become a platform connecting market access, infrastructure, and operational capabilities. 

Mr. Thang said the establishment of the city’s Fund is a concrete step toward implementing two major policy directions of the Party and the State on promoting science, technology, innovation, and digital transformation: Politburo Resolution No. 57-NQ/TW, dated December 22, 2024, and National Assembly Resolution No. 98/2023/QH15, dated June 24, 2023, on piloting specific mechanisms and policies for the development of Ho Chi Minh City. 

The Fund’s establishment comes at a time when the city’s innovation startup ecosystem is expanding rapidly, driving increasing demand for suitable financing, particularly at the early stage. Against this backdrop, the city has chosen a market-oriented venture capital model with controlled risk-taking to expand access to funding and diversify financial instruments for innovative startups. 

One notable feature is the introduction of a “controlled risk-taking” framework for State capital. Instead of requiring capital preservation for each individual project, investment performance will be assessed across the entire portfolio over an investment cycle, with total losses capped at 50 per cent of the State capital portion. In parallel, a liability waiver mechanism is applied to authorized representatives and decision-makers who fully comply with prescribed procedures, thereby helping to remove longstanding risk aversion within the public sector. 

Beyond capital provision, the Fund is also expected to promote the “quadruple helix” collaborative model between the government, universities and research institutions, enterprises, and the broader community. This approach aims to strengthen links between research, training, production, and the market, thereby enhancing the commercialization of innovation outcomes. 

“The timing is ripe for the city to implement this model, as institutional, market, and ecosystem conditions have largely converged,” Mr. Thang emphasized. “In particular, the strong attention and decisive direction from central leadership, especially Party General Secretary To Lam, along with close guidance from Ho Chi Minh City Party Committee leaders, have created significant momentum and confidence for the establishment of the Fund.” 

Its launch therefore represents not only a financial initiative but also a significant milestone in the development of Ho Chi Minh City’s innovation ecosystem, reinforcing its pioneering role nationwide. 

Investor confidence

From the perspective of private investors, participation in the Ho Chi Minh City Venture Capital Fund reflects not only financial commitment but also long-term confidence in Vietnam’s innovation trajectory. 

For Mr. Jesse Choi, CEO of Sunwah Innovations, joining the Fund is seen as a natural extension of the group’s ecosystem-building efforts in Vietnam. The move goes beyond capital deployment, he said, bringing with it regional networks, cross-border collaboration, and hands-on experience in nurturing startups. He noted that the PPP model, with 60 per cent of capital coming from the private sector, sends a strong signal of market confidence while ensuring investment discipline and flexibility. 

Similarly, Mr. Brook Taylor, CEO of Asset Management at VinaCapital, emphasized that the PPP structure strikes a balance between government direction and private-sector efficiency, helping to reduce early-stage risks while improving capital mobilization. The Fund’s joint stock company model, he added, marks a clear departure from traditional administrative mechanisms, allowing investment decisions to be driven by market signals and data. 

At the same time, both investors highlighted the “controlled risk-taking” mechanism as a critical breakthrough. By allowing a loss threshold of up to 50 per cent of State capital and introducing liability waivers for compliant fund managers, the framework helps remove longstanding barriers to deploying public capital into high-risk startup ventures. This, in turn, creates a more balanced risk-return profile and encourages broader participation from institutional and international investors. 

Beyond financing, investors underlined that the Fund’s real value lies in its ability to catalyze a more connected and functional innovation ecosystem. From a market standpoint, Ho Chi Minh City is widely viewed as Vietnam’s digital engine and a leading startup hub in Southeast Asia. Mr. Taylor described its concentration of technology talent and entrepreneurs as a “cluster effect” that minimizes operational friction and enhances the city’s appeal as a gateway to one of the world’s fastest-growing middle-class markets. 

Importantly, startups backed by the Fund are expected to gain not only capital but also credibility; an institutional “seal of approval” that helps de-risk opportunities for foreign and private investors and signals that these startups have the resources to navigate operational challenges. 

Mr. Choi added that for the Fund to truly play its “seed capital” role and attract more private investment, three key conditions must be met. First, a strong pipeline of startups and technology companies with real growth potential is essential. Second, investors require clear rules, professional management, and an efficient investment process. Third, the Fund needs to deliver early success stories to build market confidence. If achieved, these factors could enable the Fund to crowd in additional private capital and encourage broader participation in Ho Chi Minh City’s innovation ecosystem. 

Ms. Truong Cam Thanh, Deputy General Director of VNG, stressed that capital alone is insufficient for startups to scale. Rather, access to infrastructure, market-testing environments, and operational expertise are equally critical. She noted that VNG is exploring ways to support startups in accessing cloud services, eKYC (Electronic Know Your Customer), and payment platforms, which are core technical infrastructure systems that typically require significant time and cost for startups to build in the early stages. 

On the market side, VNG can provide opportunities for startups to pilot, test, and validate their products within its ecosystem before scaling up. In terms of operations, the company is also willing to share practical experience accumulated over more than 20 years of building technology products at scale, particularly in international markets. “The biggest bottleneck facing Vietnamese startups is not a lack of ideas, but the challenge of scaling sustainably,” Ms. Thanh pointed out. “In this context, the Fund can play a bridging role by connecting startups with large enterprises, facilitating market access, and strengthening operational capabilities during the early stages of growth.”

Long-term bets

Looking ahead, all three investors agree that priority sectors such as AI, semiconductors, biotechnology, and renewable energy present both significant opportunities and inherent risks. These industries typically require substantial capital, longer investment horizons, and strong alignment across policy, talent, and infrastructure. 

Mr. Choi described these sectors as critical to Vietnam’s future competitiveness, noting that while they offer high potential they also carry higher risks and are less attractive from a short-term return perspective. However, he emphasized that these are precisely the areas that will shape Ho Chi Minh City and Vietnam’s long-term economic growth. Drawing comparisons with markets such as China, he pointed out that rapid advancements in these sectors have been driven not only by capital but also by strong and coordinated public sector support in R&D funding, talent development, and innovation infrastructure. 

In this context, he believes the Fund can play a catalytic role. Beyond providing capital, it can help absorb early-stage risks, support companies through longer development cycles, and attract both private and international investors into sectors traditionally seen as more challenging. Leveraging its networks across Hong Kong (China), China, and Southeast Asia, the Sunwah Group also aims to connect Vietnamese startups with strategic investors, technology partners, and market opportunities. In the near term, the Fund is expected to go beyond being a financing vehicle and become a platform for building market confidence, attracting high-quality projects, and strengthening links between capital, talent, and industry.

Meanwhile, Mr. Taylor cautioned that the lack of “patient capital” remains a structural constraint. Without careful planning, deep-tech startups may run out of funding before reaching commercial inflection points or securing follow-on investment. He also noted that in sectors such as biotechnology and renewable energy, technological advancements often outpace regulatory frameworks, creating the risk of business models being stalled while awaiting policy clarity. 

To mitigate such risks, the Fund is expected to adopt a disciplined portfolio management approach, calibrating exposure across sectors and stages. This would allow it to pursue long-term, high-impact investments while maintaining resilience against individual project failures. Mr. Taylor expressed confidence that, given its structured framework and strong collaboration between the public sector and private stakeholders, the Fund could serve as a launchpad for Vietnam’s most ambitious entrepreneurs. 

From a practical perspective, Ms. Thanh highlighted that the greatest obstacles facing startups are not ideas but execution. Key challenges include securing an initial customer base large enough to validate business models, sustaining operations during rapid scaling, and accessing a truly supportive ecosystem. In this regard, the Fund can play a bridging role by connecting startups with large enterprises, facilitating access to shared infrastructure and platforms, and strengthening operational capabilities during early growth stages. 

At a broader level, Ho Chi Minh City aims for the innovation-driven and high-tech economy to contribute around 20-25 per cent of its gross regional domestic product (GRDP) by 2030. According to Mr. Thang, the Fund’s role goes beyond capital deployment, serving as a strategic instrument for the city’s development agenda. It is positioned as one of the key financial tools to help increase the share of the digital economy and high-tech sectors within GRDP. 

The Fund provides venture capital alongside governance advisory, market expansion support, and connections to professional investor networks. “In the long term, the Fund is expected to help nurture a new generation of innovative enterprises with strong competitiveness at both national and regional levels,” Mr. Thang said. “This will reinforce Ho Chi Minh City’s pioneering role in the startup ecosystem and contribute meaningfully to increasing the share of the knowledge-based economy within the city’s sustainable GRDP structure.”