The notion of a “startup nation” has become a strategic pursuit in recent years for many economies seeking sustainable growth and structural transformation. Vietnam, for its part, has displayed notable progress in the Global Startup Ecosystem Index (GSEI), compiled by StartupBlink.
According to the 2025 report, Vietnam ranked 55th worldwide, up one place from 2024, and retained fifth spot in Southeast Asia. This marks the third consecutive year of improvement for the country, reflecting a more robust domestic startup ecosystem backed by stronger institutions, growing resources, and expanding support networks. But behind this lie enduring challenges in legal frameworks, venture capital capacity, and the proportion of innovative startups.
Burgeoning ecosystem
Vietnam has maintained a steady upwards trajectory in the GSEI since 2020, ranking 59th in 2020, 58th in 2023, 56th in 2024, and now 55th in 2025. Local startup hubs have also made notable strides forward, with Ho Chi Minh City ranking 110th globally (its highest position to date), Hanoi 148th (up nine places), and Da Nang 766th (up 130 places). This progress indicates that Vietnam’s startup ecosystem is gradually expanding beyond its two traditional powerhouses of Ho Chi Minh City and Hanoi.
Structurally, Vietnam’s innovation-driven startup ecosystem stands out in three key areas: a young and dynamic talent pool, a diverse network of startup support organizations, and active government coordination. However, it continues to face three main constraints: an unclear legal framework, limited domestic venture capital capacity, and underdeveloped innovation infrastructure.
As a result, innovative startups make up only about 0.4 per cent of the country’s 940,000 active enterprises, equivalent to just 0.4 innovative startups per 10,000 people. Only two Vietnamese startups have reached valuations of $2-3 billion. Venture capital inflows into the country have actually been declining since peaking at roughly $1.4 billion in 2021, falling to just $500-600 million in recent years.
There are currently fewer than 40 Vietnamese venture capital funds, with total capitalization of only $20-30 million. The establishment and operation of such funds are governed by Decree No. 38/2018/ND-CP, which details investment regulations for small and medium-sized innovative startups.
Towards a distinct model
To better understand Vietnam’s position as an innovation-driven startup nation, it is useful to compare it with three representative models: Singapore, Israel, and South Korea - each of which exemplifies a distinct approach to startup ecosystem development.
Singapore, which is ranked fourth globally in the GSEI, follows a public-private co-investment model, called Startup SG Equity, focuses on deep-tech sectors, and adopts flexible visa policies such as EntrePass. Israel, ranked fifth, stands out with its Yozma Fund model, “seed capital” mechanisms, and high-tech infrastructure coordinated by the Israel Innovation Authority. And South Korea, ranked 12th, has succeeded through its Tech Incubator Program for Startup (TIPS) initiative, which fosters close connections with major conglomerates.
To build itself into a true innovation-driven startup nation, Vietnam must design mechanisms and policies that foster a culture of innovation across society. Its greatest asset lies not in land or natural resources but in the intellect of its people. Vietnam needs to accelerate entrepreneurship and invest in AI infrastructure, develop co-investment frameworks, nurture talent, and create startup visa schemes, similar to EntrePass or the Startup Korea Visa. It should also establish a set of key performance indicators (KPIs) covering startup numbers, funding volumes, patents, and research and development (R&D) employment.
By 2030, a feasible goal would be to enter the world’s Top 45 and position itself as a new innovation hub of Southeast Asia, one that integrates legal, technological, investment, and human capital dimensions with a distinctly Vietnamese character.
Regarding innovative small and medium-sized enterprises (SMEs), the 2017 Law on SME Support defines “innovative startup SMEs” as those established to commercialize ideas based on intellectual property, technology, or new business models, with high growth potential. Decree No. 04/2017/ND-CP provides further details, defining investment in such enterprises as capital contributions through equity participation or share purchases in non-public innovative SMEs. These law and decree outline conditions and support measures for innovative startups.
To further advance the vision of a national startup ecosystem, it is essential to review and assess the implementation of these legal instruments, providing a foundation for future policy refinement in support of innovative enterprises and Vietnam’s broader startup nation goals.
(*)Lawyer Bui Van Thanh is the Director of New Sun law firm
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