Over the past two decades, the era of many
innovation startups, fast-growing technology companies ( or startups) have
exploded around the globe. Vietnam is one of the countries which assimilated
into this global phenomena. With a population of nearly 100 million people more
than 50 million people of whom are internet users, Vietnam is considered as one
of the countries with dynamic entrepreneurship environment in Asia and rank 11
out of 62 countries with best startups ( Global startup ecosystem ranking in
Vietnam from 2014 to 2015). In the first quarter of 2016, various startup
projects in Vietnam raised a lot of fund
from international investment. This is a positive signal for Vietnam startups.
This paper will discuss the opportunities and some challenges such as lack of funding
and poor management team for young people to startup a business in Vietnam
2. Discussion of findings
2.1. Definition of startup and facts about
startup in Vietnam
The definition of startup derives from American Heritage Dictionary which is “a business or undertaking that has recently begun
operation.” Meanwhile as defined by Amy Fontinelle in the article “What exactly is a
startup?”, it is a new company that is beginning to develop, usually is a small
company, invested in the beginning, set
up by one or many people and these companies often provide a service or a
product which has never appeared in the market.
Since 2013, the number of startup companies has dramatically increased. Never before have the wave of startups started so vigorously in Vietnam. According to Mr. Hoang Quang Phong – Vice President of the Chamber of Commerce and Industry of Vietnam, Vietnam has about 1,500 startups. According to the density of startups per capita, Vietnam is more than countries like China, India (there are 2,100 startups in Indonesia, 2,300 in China and 7,500 in India). In which information technology enterprises surpass that of enterprises in other fields. The point is that among them, many startup choose their direction: Tech (Tech Startup). The characteristic of Startup Technology is that it does not need too much capital initially (compared to other industries) and can easily learn from previous models in the world. 2.2. Opportunities for young people to startup in Vietnam According to Techlist.asia, the number of Vietnamese startups now reaches 1,500. That makes the country the third largest ecosystem in Southeast Asia, behind Singapore and Indonesia. Recently Vietnam’s startup ecosystem is getting stronger than ever before because many Vietnamese business receive funds from foreign venture capital such as United Impact, Lotus Impact, 500 Startups and 1337 Ventures. For example, In 2015’s first quarter, Google-rivaling Vietnam startup C?c C?c attracted $14 million or Lozi – an order food application in Vietnam get 7-digit funding from Golden Gate Ventures. The world is right now watching Vietnamese startups, Google CEO had come to Vietnam in 12/2015 and speaking about the future of startup in Vietnam. Moreover, Vietnam’s government is being more serious on building a sustainable and advanced ecosystem for Startups. In June 2013, Ministry of Science and Technology launched a project called Vietnam Silicon Valley (VSV) – “The Project seeks to create an ecosystem of innovations and technology commercialization in Vietnam – by combining our Vietnamese entrepreneurial spirit and innovative nature with the most successful practices that America has to offer in startup development and mentoring, accelerators, and venture capital funding and investing” (Anonymous,2013) Furthermore , everything in Vietnam is cheap but in high quality: labour, rental and food. Vietnam’s average income is around 2000$/year. Therefore, the entrepreneurs can find their own team with high-level academic for less than 500-700$/month. Duong The Vinh, the co-founder and CEO of HCMC-based Cititech stated that “One of the big advantages of doing a tech business in Vietnam is we have great talent with low operation costs.” “Software engineering graduates can command a starting salary of US$500 and above US$1000 for those with more than three years of experience. This is considered a relatively high income” Son Le Thanh – Director of Startup Grind elaborated. Not only that Vietnamese entrepreneurs work very hard, spending an average of 14-16 hours a day working and they also have technical backgrounds, strong in software development. Alvin Koh – the founder and CEO of Hanoi-based Peko Peko supposed that “Young people in Vietnam are willing to work hard, fail and try again.” Vietnam has co-working places like Toong or Up-Coworking in Hanoi City and DreamPlex in HoChiMinh City is a very important factor that young people need before startup. Some places for startup companies work in office are cheap, less than 300$/month. For 1000$ monthly, the entrepreneurs can have a fully furnished office in a building near Hanoi’s downtown. Like its counterparts, Vietnam is also home to a lot of young people, approximately 40 percent of whom are less than 25 years old. The Statistics Portal indicated that for 2017, the number of smartphone users in Vietnam is estimated to reach 28.77 million. This would mean that around 28.5 percent of the population would use a smartphone at this time, with this share predicted rise to 40 percent by 2021. The statistics show that Vietnam is getting closer to technology , also going with many foreign investors are interested in using information technology, Internet, mobile as the basis of Vietnamese start-up (also known as ICTs). Besides choosing some fields that related to information technology, Internet, mobile to startup, Vietnam is also well-known as an agricultural country, up to 70% of the working population in this field. Agricultural production thus plays a very important role in the national economy so there are a lot of ideal for entrepreneurs can perform in this field. 2.3. Challenges for young people to startup in Vietnam According to data from the Business and Business Support Center (BSA), 3 out of 10 startups will die prematurely in the first two years of the market, with the remaining half disappearing in just the next three years. And the first challenge facing startup is the lack of capital “It’s quite hard to convince Vietnamese investors to take a risk at the very beginning, and foreign investors or VCS ( Version Control System) take too long to process” said Khoi Nguyen – the founder and CEO of WeFit. Unlike other startup in USA or other developed markets where have many investment funds, it is easier to call capital if the business has a good idea, but in Vietnam not only depends on the idea but also proves to investors the results of project. Recently, a lot of young people have ideas to startup in Information technology, however the ultimate goal of investment funds is also business, while IT projects require a lot of time to recover, and must continually improve technology investment. So if the investment for the project has no buyers, it takes a long time to get profits, withdraw funds difficult and have to invest continuously so few funds want to invest. According to Nguyen Huy Vu – founder of Fibo ( Marketing company in Vietnam), he said that young people in Vietnam have the spirit of learning, intelligent, sensitive, it is potential but they are not really good. For example, a company in Vietnam only has few levels, meanwhile, in US a technological company has at least 200 levels, and the higher levels, the better ideas. This example shows that startups Vietnam have poor management team and this will lead to the fail of startup although the ideal is very excellent. “Good ideas can fail, but good teamwork is the most important factor in ensuring that startups can survive” said Chairman of Alpha Vision. Furthermore, Vietnam’s young people have great potential for creativity but lack the initial guidance to get the idea right. In a recent startup event, many young people bring unique ideas, expressing passion for creativity, hard work, but many ideas are hard to come to life. This is why Geroge Nguyen, founder of the Google Developer Group, can only select 2/54 ideas that can lead to commercialization. Finally, startups have difficulty in communication and auditing. Many startups in Vietnam now “just do, do not know say”. That is they just plug into the product to do not know how to introduce products to the market, lack of planning so that the ability to succeed is not high. There is a need for more overseas collaboration to gain exposure and knowledge transfer. However, startups usually encountered the trouble of having to communicate and persuade foreign investors to invest in their projects by the difference between languages. In addition, many companies have good products but when approaching investment funds, it is difficult to determine the price, accounting books, finance … If the audit report is made by a public, it is safe to rely on foreign companies, but if it is a domestic implementation report, it will take a closer look. Startups will be more competitive if there are reports made by reputable auditors.