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Vietnam’s start-up ecosystem has a lot of potential and can be a prime market for start-up investment, but many say the quality of start-up projects have not met the potential due to these firms’ lack of market-oriented policies and development experience.
While experienced investors are capable of supporting the country’s immature start-ups by providing experience or capital, a lack of proper connections between start-ups and big firms was blamed for stopping the country ecosystem from blooming.
Tran Anh Tuan, General Director of the Sao Bac Dau Technology Services Company, said due to such a lax network, many start-ups had not been able to attract investment or make products meeting market needs.
“Start-ups’ inexperience is the most crucial reason for their failure. They need support and connections with other components of the ecosystem, which are businesses, researchers, government and investors, to be able to succeed. Of which, experienced businesses play a very important role,” Tuan said.
“Big businesses can be the investors, the consultants and clients for start-ups in Vietnam, which are often started by very young people who mostly have basic knowledge but not real market experience.”
Echoing Tuan’s opinion, Pipa Turvanen from Finland’s Turku Science Park, affirmed the role of big businesses in the development of start-ups.
“Without their experience, ideas would be narrow. Otherwise, co-operation with start-ups, students and scientists can open the way for products or business models that are cost-effective,” she said.
She cited the start-up incubator model of the Finnish company, in which the Turku Science Park would facilitate and provide connections, experience and knowledge sharing between concerned parties based on business and innovative development.
“It would be brilliant to witness big companies paying respect to start-ups or co-operating with their rivals for the purpose of improving innovative capacity and the start-up ecosystem as a whole,” she said.
Hoang Minh Tri, Director of AiPac, a US-based one-stop-shop manufacturing service, said big companies could co-operate with start-ups to maintain their competitive advantage.
“The development of technologies creates opportunities for businesses to innovate, improve their services and provide new experiences for their clients. In order to apply technologies quicker and better, big companies often shake hands with start-ups,” he said.
Tuan from Sao Bac Dau Technology Service Company, said from his own experience such co-operation actually helped the company provide solutions that suited market needs quickly.
“If we were to walk alone, it would take a long time to achieve what we have achieved,” Tuan said.
What big companies can offer are vast – from building business plans, product development plans, giving business experience to capital management or human resource planning.
Tony Wheeler, founder of ImagineX Ventures, senior mentor to Startup Vietnam Foundation, said in order for start-ups to develop and contribute to the economy’s development, big firms have to “sit on the same boat” with start-ups and offer support.
“It can be financial support, or the offer to become clients of start-ups – not rivals,” he said.
Vietnam’s 3,000 start-ups have been boosted with investment and it increases every year. In 2018, start-ups received investment worth 889 million USD, almost triple 2017’s figure (291 million USD).
Tony Wheeler from ImagineX Ventures, said that a strong start-up ecosystem needs cooperation from businesses, the Government and scientists.
There have been a lot of activities within Vietnam’s ecosystem but these start-ups needed to focus on improving their quality before expanding, he said.
“There is a need for a strategy to shift the economic structure towards advanced industry and services, which would need a smaller labour force but with higher technological competencies and innovative thinking,” he said.
Another problem for Vietnam’s start-ups is that too many entrepreneurs were trying to address minor issues.
“They need to find solutions for bigger problems – once they find answers to these problems, they also find answers to the problems faced by many other developing countries,” he said.
