Vietnamese startups find it difficult to call for capital

South Korea, not the US or Singapore, is the market where many Vietnamese startups will call for capital, according to Pham Ngoc Huy from Vietnam Silicon Valley.

Huy, who attended a workshop on strengthening resources to attract capital held some days ago, affirmed that South Korea investors want to pour capital into Vietnam’s startups.

Vietnamese startups find it difficult to call for capital

Pham Ngoc Huy from Vietnam Silicon Valley (left)



In the thoughts of many Vietnamese, Singapore is the nearest market for Vietnamese businesses. Vietnam’s startups also tend to call for capital from the US. However, Vietnam is still not a targeted market for investment funds from these countries, except for highly promising projects.

Meanwhile, South Korean investors have big money and are competing fiercely with each other to find startups to invest in. As the number of good startups in South Korea is limited, they tend to look for startups in other countries. Vietnam is a major choice partly because of business culture similarities. 

In general, startups encounter difficulties when activating their business and one of the biggest tasks is seeking capital. In the first phase of operation, it is difficult to access investment funds.
 

In general, startups encounter difficulties when activating their business and one of the biggest tasks is seeking capital. In the first phase of operation, it is difficult to access investment funds.


When calling for capital, young founders, especially those who finish technology schools, try to show business knowhow and innovative technology. But they tend to overvalue their startups.

Meanwhile, investors, when considering investment opportunities offered by startups, mostly focus on business models and the products' chances for sales. In many cases, startups have relatively good products, but their business model is not clear and they do not receive capital.

“if the business model is not clear, it will be very difficult to develop,” Huy said.

“In order to persuade investors, make friends with them at first,” he said.

Meanwhile, the factors about project potential and market are just figures for reference, especially when the figures are unclear when startups are in the early stages of development.

As for technology startups, investors do not focus on potential profits of startups, but analyze the abilities of founders and whether the founders can play any role in investors’ ecosystems.

According to Huy, the good time for startups to call for capital is when startups have developed for a certain time, and can define their business model, strategy and business structure. At that time, the value of businesses begins to increase.

He said in the first phase of development, startup founders should not think too much about the value of their businesses.

“I have met many startups and they overvalued their businesses though they were still developing their products,” he said. 

Le Ha

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