Vietnam’s startup scene is entering a new phase of development, marked by noticeable improvements in project quality and more active participation from major corporations. For its ecosystem to truly break through, however, it has become increasingly urgent to remove legal bottlenecks and strengthen the operational capacity of investment funds.
At a discussion held within the recent launch of the National Startup Project Development Program, also known as Startup Festival 2025, Mr. Nguyen Tien Trung, Vice Chairman of the National Startup and Innovation Advisory Council (VSMA), said that, within the innovation ecosystem, investors and investment funds are often described as the “lifeblood” of startups - particularly during the high-risk early stages. While this role is widely acknowledged, the reality is that establishing and operating investment funds in Vietnam still faces numerous challenges.
Structural constraints
According to Dr. Nguyen Van Truc, Director of the Center for Training and Technology Market Development Support within the Department of Startup and Technology Enterprises at the Ministry of Science and Technology, the innovation ecosystem comprises multiple stakeholders, including the government, businesses, research institutes and universities, advisors, and investment funds. But for many years, Vietnam has lacked specific regulations governing venture capital funds, making it difficult for many startups to access formal sources of capital.
Administrative barriers have also posed a persistent challenge. In the past, procedures for establishing and implementing investment fund schemes were highly complex, at times involving as many as seven separate steps. Training and capacity-building stages alone consumed substantial time and resources, slowing the flow of capital into the market. This partly explains why Vietnam’s startup investment market remains relatively modest in scale compared with other countries in the region.
Dr. Dam Quang Thang, Chairman of the VSMA, noted that private funds operating under Decree No. 38/2018/ND-CP have faced significant limitations, resulting in less-than-optimal performance. A lack of appropriate investment thinking, particularly an insufficient understanding of the risks inherent in innovative startups, combined with weak fund management capacity has directly constrained the effectiveness of capital deployment.
From the perspective of a foreign investor, Mr. Davide Cali, Director of Crossfund, said Vietnam benefits from strong GDP growth and a young, enthusiastic workforce, but the biggest deterrent for foreign capital lies in an unstable legal environment as well as regulatory frameworks that are still in transition. Procedures for accessing foreign investors are sometimes insufficiently open, with unclear implementation steps. The language barrier, in particular, has caused many startups to lose competitiveness when seeking international funding.
One seemingly “technical” yet decisive issue is the corporate structure of startups. International funds are often wary of unclear or non-standard capitalization tables, or structures involving too many small shareholders. In practice, many startups have already raised capital but lack clear agreements among founders or fail to adopt structures aligned with international standards. Spending six months to a year restructuring these issues frequently leads to unfortunate outcomes, with investment deals collapsing midway.
Mr. Le Thanh, Founder of the Vietnam Future Fund, added that local founders lack an effective “bridge” to understand the stringent requirements of foreign funds. While many companies have market-ready products, their strategic vision and ability to communicate in an international business language remain limited, falling short of global market expectations.
New moves
Against this backdrop of institutional constraints, the issuance of Decree No. 264/2025/ND-CP on October 14, 2025, governing national and local venture capital funds, is widely seen as a major turning point.
Dr. Truc said this marks the first time Vietnam has introduced a relatively comprehensive legal framework for venture capital investment, creating a crucial driver for mobilizing social resources. “Decree No. 264 not only provides a legal corridor for venture capital funds to operate more transparently and effectively, but also opens up opportunities for universities and research institutes to establish their own startup investment funds,” he said. “This will significantly accelerate the commercialization of scientific research results; a valuable resource within the ecosystem.”
The Decree is expected to offer a critical “boost,” helping remove institutional bottlenecks and create more favorable conditions for the formation and growth of startup investment funds. In turn, this should support a stronger and more sustainable innovation ecosystem in Vietnam in the coming period. The combination of public and private resources to form funds with clear legal status at both the national and local levels is also expected to make capital mobilization more stable and efficient.
In parallel, Decree No. 210/2025/ND-CP, issued on July 21, 2025 and amending Decree No. 38 on investment in innovative startups among small and medium-sized enterprises, has addressed shortcomings in earlier regulations and created more favorable conditions for private funds. These changes are likewise expected to ease institutional bottlenecks and promote sustainable ecosystem development.
To fully capitalize on policy opportunities, experts said changes are needed on both sides: regulators and the startups themselves. For startups, Mr. Cali advised founders to be in a state of “maximum readiness.” This means not only having a strong product but also proactively “cleaning house” by ensuring transparent corporate structures and professional internal agreements. A concrete and realistic plan is essential to avoid missing opportunities when investors come knocking.
“Investing in startups is not just about money, it is also an investment in people and team capabilities,” Mr. Cali said, adding that the Vietnamese Government should continue to play a leading role in the ecosystem. Stronger links with innovation centers, including international hubs, are needed to bridge domestic and global capital flows.
Mr. Tran Van Le, Chairman of the Phuong Linh Group, stressed the importance of self-mastery and viable business solutions. Startups must turn ideas into “products” and tell their project stories convincingly enough for investors to be willing to “buy.” Founder capability and competence, he said, are decisive factors.
Similarly, Mr. Hoang Cong Doan, Chairman of the Song Thao Group, said capital is not the most important factor at the starting line. “If you go in the wrong direction, the more capital you have, the faster you fail,” he explained. Rather, startups need clear strategies, breakthrough ideas, and guidance from experienced mentors to avoid fundamental management mistakes.
At the ecosystem level, experts said the government should continue to play a guiding role by strengthening links between domestic and international innovation centers. Creating these capital bridges will help Vietnamese startups more easily access global standards and knowledge.
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