Viet Nam is the third largest start-up hub in Southeast Asia in terms of venture capital investment and number of start-ups. Although a newcomer in the regional start-up scene, with the first start-ups emerging in the mid-2000s, its start-ups are contributing to transform the economy from a low-end manufacturing hub to an innovation one. This chapter presents an overview of the start-up scene in Viet Nam, highlighting its distinctive features, including the focus on open innovation and knowledge networks, the role of women in start-up creation in the country and the need to scale up financing for start-up expansion.
Start‑up Asia
Chasing the Innovation Frontier
Abstract
Viet Nam is an emerging start-up player in Southeast Asia. Southeast Asia has been gaining global attention as an increasingly relevant start-up pole, particularly in fintech, e-commerce and logistics, where unicorns have been rapidly emerging (ASEAN and UNCTAD, 2022[1]; Angsana Council, Monk's Hill Ventures and Bain & Company, 2022[2]). Still small by global standards, Viet Nam’s start-up ecosystem has grown fast since the mid-2010s and is now the third largest in Southeast Asia in terms of venture capital investments (2020-2022) and fourth largest in terms of the number of start-ups [authors’ calculations based on (Crunchbase, 2024[3])].
Start-ups have the potential to contribute to Viet Nam’s gradual transformation from a manufacturer and exporter of labour-intensive goods to an innovator. In line with trends in the region, Viet Nam has stepped up efforts since 2016 to raise the visibility of the local start-up ecosystem with the launch of Project 844 - Initiative for the start-up ecosystem in Viet Nam until 2025, co-ordinated by the National Agency for Technology Entrepreneurship and Commercialization Development (NATEC). Start-ups are seen by Viet Nam’s policymakers as a critical partner in unleashing innovation and digitalisation in the country.
This chapter presents an overview of Viet Nam’s current start-up ecosystem and the country’s policies to support start-up development. It concludes by identifying challenges for the future.
Viet Nam is a newcomer when it comes to start-ups. Start-ups first appeared in Viet Nam in the mid-2000s, linked to information, communication and telecommunication (ICT) technologies. For instance, VNG, one of the country’s notable technology companies, was founded in 2004 as an online gaming company and is now an operator of the popular messaging app Zalo. However, the ecosystem started growing faster roughly a decade later, with venture capital first surpassing 0.1% of GDP in 2019. Investments have kept growing as a portion of the country’s economy accounting on average for 0.18% of GDP during 2020-2022, which is on par with the Asian average but still below larger hubs such as Indonesia (0.3%) and Singapore (1.6%) (Figure 5.1). Viet Nam’s trajectory is similar to that of the Philippines and Thailand, which started growing around the same time, following a boom in larger nearby markets such as the People’s Republic of China (hereafter “China”), India and Indonesia a few years before.
Viet Nam’s start-up ecosystem has been growing fast. The country’s share of Southeast Asian venture capital stands at 6% of the regional total, up from 1.8% during 2011-2013, the third largest in Southeast Asia after Singapore and Indonesia (Figure 5.1). At the same time, the country is home to 9% of all start-ups in the region, the fourth largest rate after Singapore, Indonesia and Malaysia. The ecosystem has also been gaining in density: Viet Nam has the third highest density of start-ups in the region with approximately 2 start-ups per 100 000 people. However, that is still low compared to more mature hubs. The OECD average for instance is 40 (Figure 5.1).
Note: Panels B and D: based on active start-ups founded between 2014-2023. Panels C and D: Asia and OECD values are regional averages. Panel D: the Asian average is computed on countries with over 50 active start-ups and excludes Singapore.
Source: Authors’ elaboration based on Crunchbase (2024[3]), database, https://www.crunchbase.com and IMF (2024[4]), World Economic Outlook, https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD.
The country’s distinctive history and geography have led to two main hubs emerging in the country: Ho Chi Minh (HCM) (54% of start-ups) and Ha Noi (38%), which are among the top 30 largest hubs in Asia (Figure 5.2). This is in contrast to other countries in the region where start-ups concentrate only in the capital city, such as Thailand where 85% of the country’s start-ups are located in Bangkok. The same holds for Bangladesh where Dhaka is home to 89% of start-ups (OECD/UNCTAD, 2023[5]). Viet Nam, on the other hand, is similar to countries such as India and China that have a more dispersed geography. The two cities are the country’s most populous ones, accounting respectively for 8.5% and 9.4% of the country’s inhabitants, and its two biggest economic centres, accounting for about 12.6% and 15.5% of the country’s GDP respectively in 2022. Yet they can leverage different strengths when it comes to start-ups: Ha Noi has a high concentration of educational resources and an overall higher skill level among the population. Approximately 50.3% of labour is trained (i.e. has received some form of professional training under the national educational system for three months or more) – the highest in the country – whereas the same figure is 35.6% in HCM (General Statistics Office, 2022[6]). By contrast, HCM’s assets include a vibrant financial market (the country’s largest and oldest stock exchange is located there) and the country’s largest port (23rd largest in the world in 2022 by container throughput) (Lloyd's List, 2023[7]). While specialisation among start-ups is similar across the two hubs, HCM’s start-ups are more likely to scale up: about 13% of financing deals were late-stage start-up deals there, compared to 2% in Ha Noi.
Other hubs are also emerging in Viet Nam, such as Danang, which accounts for 9% of the country’s start-ups. In Danang, start-ups are part of the Danang Hi-Tech Park, which was established in 2010. Songhan incubator, a private sector initiative, was established in 2017 and then in 2019 a business incubation programme was created.
Source: Updates OECD/UNCTAD (2023[5]), Production Transformation Policy Review of Bangladesh, https://doi.org/10.1787/8b925b06-en. Based on Crunchbase (2024[3]), database, https://www.crunchbase.com, population statistics from UNSD (2023[8]), database https://unstats.un.org/unsd/demographic-social/products/dyb/index.cshtml#overview and country statistical offices.
Viet Nam’s start-up ecosystem is still maturing. As a result:
Investments show high fluctuation. VC investments have been somewhat turbulent in recent years and reflect global trends. Bouncing back from the COVID-19 pandemic, 2021 was a record-breaking year for venture capital globally and in southeast Asia, and Viet Nam outcompeted its neighbours, raising a 2.6 times greater share of Southeast Asia’s funding than Thailand, for example. However, recent inflation, interest rate hikes and fears of recession contributed to 69% lower venture capital funding in Viet Nam in 2022 than 2021, compared to a 34% decline globally and a 15% decline in Southeast Asia. Despite the ups and downs, Viet Nam’s start-ups are relatively well-funded. Seed investments represented 7.4% of investment deals and 63.5% of total VC invested during 2020-2022, similar to Singapore (9% and 62% respectively), and higher than Indonesia (3.2% and 51%).
Venture capital seeks to exploit market potential, concentrating in e-commerce and fintech In Viet Nam, venture capital investments concentrate in fintech (55% of total during 2021-23) and e-commerce (18%) (Figure 5.3). In fact, in Viet Nam e-commerce and fintech are linked through the rise of integrated apps that blur the lines between the two sectors. Two of Viet Nam’s oldest unicorns (VnPay and Momo) are e-wallets. VnPay has partnered with Tiki, a popular e-commerce start-up in Viet Nam, while Momo has recently added functionalities for e-commerce through the integration of mini-apps into its platform. The rise of such players is related to the market potential: only 31% of Vietnamese adults have a bank account, compared to 69% on average in Asia [authors’ elaboration based on World Bank, (2021[9])], leaving a financial access gap to be covered by digital payment solution firms. This will become increasingly popular as consumers continue to purchase more and more online. The fintech category also includes investments in SkyMavis, the country’s third unicorn, which witnessed quick success with its blockchain-based gaming tools. Similar to investments, Vietnamese start-ups tend to concentrate in sectors that leverage the country’s large consumer potential, although they are more diversified and in line with regional trends. The top sectors for start-ups were IT and software (25% of all start-ups), fintech and business services (12% each).
Overall, investments in emerging technologies are lower in Viet Nam compared to the Asian average. For instance, artificial intelligence (AI) and data analytics absorbed 5% of venture capital in Asia, but only a negligible amount in Viet Nam. One emerging area for investments for Viet Nam is sustainability technologies. Renewables and other sustainable technologies attracted some 5% of total VC investments in Viet Nam, higher than the Asian average of 1%. This is due to large investments attracted by SkyX Solar, a rooftop solar panel provider that was created in 2019 with funds from French-based company EDF, and seed investments into Selex Motors, an electric vehicle start-up. While start-ups in renewables attracted sizeable investments, they are still small in number, accounting for 1% of total. Nevertheless, there is potential for growth: Viet Nam has leveraged its electronics manufacturing strength to become a big producer of renewable technologies, becoming the third largest world exporter of solar panels and the 10th largest lithium battery exporter during 2019-2021 [authors’ elaboration based on UNCTAD stat (2022[10])]. The domestic energy market is also an enticing factor. In 2013, Viet Nam had a capacity of only 5MW of solar, but by 2022 it had grown to 18 500MW, the fifth highest in Asia, which was on par with that of France that year (IRENA, 2023[11]).
Note: All active start-ups founded between January 2014 and December 2023. Asia average includes countries with over 50 start-ups and over 10 annual VC deals.
Source: Authors’ elaboration based on Crunchbase, (2024[3]), database, https://www.crunchbase.com.
Foreign investors dominate the venture capital scene, with Singapore playing a key role. Local investors participated in about 45% of the country’s investment deals during 2022-22, either alone or together with foreign funds, slightly higher than in 2013-16 (42%) (Figure 5.4). The picture in Viet Nam is similar to Thailand, and significantly higher than in Singapore and Indonesia which have more developed capital markets and start-up scenes to sustain bigger funds. Nevertheless, the local investor scene is becoming denser over time. With the first start-ups emerging, venture capital also started to take root, with the first local investors emerging in the second half of the 2000s and becoming more established since the mid-2010s following regulatory reforms (NIC and Do Ventures, 2021[12]). Among the most active local investors are private funds, such as Think Zone, Do Ventures, Vina Capital Ventures, and VSV-Accelerator, a government-backed accelerator. In terms of foreign funds, there is a strong regional flavour in the investments pouring into Viet Nam’s start-ups. Singaporean investors participated in 38% of rounds with known investor location, followed by the United States (30%), Korea (15%), Hong Kong China (8%), and Japan (11%). Among the most prolific foreign funds in Viet Nam are US-based 500 Global, Korea-based Nextrans and Singapore-based Insignia Ventures Partners.
An increasing number of support organisations present in Viet Nam is also contributing to making the ecosystem more effective in fostering start-ups (Box 5.1). The number of supporting organisations almost doubled to 50 between 2017 and 2018 and then reached 197 in 2022 (including 84 incubators and 35 accelerators), of which almost 57% were led by the private sector (NATEC, 2022[13]; Pham and Hampel-Milagrosa, 2022[14]). These are helping start-ups with access to funding, either directly or through training and networks. For example, Zone Start-up Accelerator Program provides seed capital and is particularly competitive (it accepts only 1% of applications), while VSV Capital has the longest-running incubator and accelerator in Viet Nam, sponsored by the Ministry of Science and Technology, having made 70 investments since 2014 of USD 50 000 per start-up in exchange for a 7-10% equity stake. Some organisations are trying to foster specific emerging technologies. For example, the Vietnam Energy Acceleration Program, an initiative of US-based New Energy Nexus, specifically supports early-stage clean energy start-ups through free, sector-specific workshops and training boot camps. Accelerators, incubators and co-working spaces participated in about 19% of all seed financing, a level similar to those in Singapore and India (22% and 19% respectively), and nearly double the share in Thailand (10%).
Note: Includes only deals for which investors have known location. For deals with over five investors, the first five listed were included in the analysis.
Source: Authors’ elaboration based on Crunchbase, (2024[3]), database, https://www.crunchbase.com and additional research.
KisStartup
Since 2015, KisStartup has aspired to create a talented community of innovators centred in Viet Nam and acting across the globe. KisStartup facilitates innovation-based peer learning in Viet Nam and works closely with local experts, universities, and start-uppers. They accompany and support start-ups, providing knowledge and tools to increase their innovative capacity. Throughout 2022 KisStartup connected with over 30 local universities and provided training for a further 30 entrepreneurs seeking investment. Beyond direct mentoring support for start-ups and enterprises, KisStartup also helps train innovation coaches and carries out research in business innovation.
BizCare
BizCare has, since 2020, aspired to be a catalyst for the Vietnamese start-up ecosystem. They work directly with seed-stage start-ups, universities, and local communities to generate a culture of innovation. The business incubator provides tailored support focusing on sustainable growth, operation optimisation, and effective management. Their support means that start-uppers are better informed to create their competitive advantage within the market and better connected to available funding and investment. In 2023, BizCare was selected by the United Nations Development Programme, the Canadian Ministry of Foreign Affairs, and the Vietnamese Ministry of Planning and Investment to support 30 social impact businesses (SIBs) through the ISEE COVID programme. The programme provided vital financial and technical assistance to the SIB finalists, supporting women and vulnerable groups.
Source: High Level Roundtable on Start-up Asia: Chasing the Innovation Frontier - the Case of Viet Nam, held on 17 March 2023.
Viet Nam, since it embarked on market-oriented reforms in 1986 (the so-called Doi Moi), has developed into a global manufacturing and trade centre, based on a strategy of attracting export oriented, labour-intensive foreign direct investment (FDI). Viet Nam accounts for less than 0.9% of Asian GDP, but 3% of its exports of goods and services [authors’ elaboration based on UNCTAD stat, (2022[10])]. In certain industries, the country’s dominance is even higher: 11.3% of the world’s mobile phones were exported from Viet Nam in 2021, the second largest after China (49%) [authors’ elaboration based on ITC, (2023[15])]. This transformation has also been supported by an increasingly entrepreneurial private sector (OECD, 2021[16]; GEM and VCCI, 2018[17]). The share of non-state firms1 rose from 83% of all firms and 3.15% of the capital invested in 2000 to 97% of firms and 59% of capital invested in 2021 [authors’ elaboration based on General Statistics Office, (2022[6])].
Now the country is gearing to switch gears and stimulate development through science, technology and innovation. Viet Nam’s policies for innovation have evolved during the last four decades as the country has moved from a centrally planned economy to a socialist market-oriented one. Moreover, priorities have shifted from promoting integration into global markets as a low-cost export platform to an innovator (OECD/The World Bank, 2014[18]; World Bank, 2021[19]; ERIA/OECD, 2024[20]). From 1979 to 2010, policies aimed to progressively increase the typology and capacity of science and technology organisations and set the main regulatory frameworks for undertaking research, including establishing rules regarding intellectual property. However, in the past decade, while regulatory reform has continued, Viet Nam has been increasingly looking at innovation as a necessary ingredient to maintain growth and development. Accordingly, innovation policies are focusing on upgrading manufacturing industries and harnessing digitalisation (OECD, 2023[21]). This orientation is reflected in the current Socio-economic Development Plan 2021-2025 and Viet Nam’s National Master Plan for 2021-2030 with a vision to 2050. The Strategy for Scientific-Technological Development and Innovation until 2030, launched in 2022 under the framework of the country’s Master Plan, makes this vision more concrete: it aims at raising investments in R&D to 1%-1.2% by 2025, up from 0.53% in 2019 (Table 5.1). Currently, 0.42% of GDP was invested in R&D in Viet Nam (data for 2019), more than double with respect to the beginning of the decade (0.15%), but one-fifth the OECD average (2.72%) [authors’ elaboration based on UNESCO, (2023[22]) and OECD stat, (2023[23])].
Source: Authors’ elaboration based on official sources.
Fostering start-ups has become a key goal of Viet Nam’s innovation policies since 2016. Viet Nam had been paying increasing attention to start-ups since the mid-2000s. For example, the 2009 Law on High Technologies encouraged venture investments in hi-tech industries, while some scattered programmes started to target start-ups, including with the support of international co-operation. For instance, the second phase of the Vietnam-Finland Innovation Partnership Programme that run from 2014 to 2018 provided financial assistance and training for selected start-ups and ecosystem builders with a budget of EUR 11 million. However, such efforts were scaled-up in 2016 with the launch of Project 844 - Initiative for the start-up ecosystem in Viet Nam until 2025 (Decision No. 844/QD-TTG and updated in 2021) and the Strategy to 2030 that announced as concrete goals the doubling of start-ups in the country, the creation of open innovation networks and start-up support mechanisms as key objectives to foster start-ups (Box 5.2).
Recognising that connectivity among innovation ecosystem stakeholders is crucial for generating knowledge, particularly given the increasingly multidisciplinary nature of new technologies, Viet Nam aims to foster open innovation networks where start-ups will play a key role.
To this end, the National Agency for Technology Entrepreneurship and Commercialization Development (NATEC) and the National Startup Support Centre of Vietnam (NSSC) commissioned BambuUp to create a specialised Vietnam Open Innovation Ecosystem Report 2022, including a survey of 81 firms and 62 start-ups where experts and public agencies identified the readiness of Viet Nam to move towards open innovation networks. The study showed that while there is significant progress made, there is still scope to raise awareness of open innovation and improve connectivity among actors.
Source: Authors’ elaboration based on NSSC and BambuUp (2021[24]).
In terms of the role of start-ups, the report found that while start-ups tend to co-operate with universities in Viet Nam (about 52% of the start-ups surveyed had done so in the past), there was still a gap in co-operating with public actors (only 15% of start-ups had done so). Co-operation between start-ups and corporations could also further increase.
Source: Authors’ elaboration based on NSSC and BambuUp (2021[24]), Vietnam Open Innovation Landscape Report 2021.
Viet Nam’s efforts when it comes to start-up development have centred on two main axes: i) reforming legal frameworks for start-ups, in line with Viet Nam’s overall move towards a more market-oriented innovation system since the Doi Moi reforms of 1986 (OECD/The World Bank, 2014[18]); (Vo, Nguyeh and Dinh, 2018[25]); ii) creating support institutions that can enable start-ups to access mentorship and networks, thus raising overall visibility for the start-up system.
The main legal reforms for start-ups include:
The Law on Support for SMEs (No. 04/2017/QH14), which came into effect in 2018 and the follow-up Decree on Investment in Small and Medium-sized Start-up Companies (No.38/2018/ND-CP) (ERIA/OECD, 2024[20]; OECD, 2021[16]). Together these regulations:
Introduced a definition for start-ups (Table 5.2), which has been adopted since in various strategies and programmes.
Set out the types of support that start-ups can receive, including those available to all SMEs (credit, credit guarantees, grants, lower tax rates, simplified administrative procedures, exemption from various fees for land and training), and more targeted ones, such as access to facilities and networking, support with technological research and transfer and developing intellectual property (IP).
Introduced guidelines for investment in start-ups, including by the state. Limited partnerships were introduced as a potential vehicle for venture capital, bringing the country closer to global practices. These regulations also clarified that provincial governments, which are responsible for disbursing support to SMEs, are allowed to make venture capital investments as well, through local financial agencies (either an SOE or an extra-budgetary fund) in co-operation with selected venture capital funds. Investment is limited to 30% of the value of start-ups’ privately-sourced capital levels. Within five years the stakes have to be transferred to a private investor.
The 2017 Law on Technology Transfer (No.07/2017/QH14, updating the 2006 version), and decisions setting up the technology market (Decision No.1158/QD-TTg) and intellectual property (Decision No.2205/QD-TTg), which set targets and goals for boosting intellectual property transactions and facilitating the commercialisation of research. They also provided a legal framework for large enterprises to use their technology development funds to invest in start-ups.
The Investment Law (Law No.61/2020/QH14), which clarified that start-ups, national innovation centres and research and development centres are eligible to receive investment incentives. The law also adopted a negative list approach, relaxing restrictions on FDI. It is worth noting that 100% foreign ownership is allowed in many digital sectors relevant for start-ups, such as AI, 3D printing and IoT.
Note: Eligibility criteria found in the Law on Support for SMEs and likewise used in policies such as Program 844.
Institutional changes have accompanied legal reforms in Viet Nam to create an increasingly articulated governance for start-up policies. Start-up policy is mostly undertaken by the Ministry of Science and Technology (MOST), which translates Viet Nam’s broad-brush innovation goals into concrete action plans, oversees specific start-up projects (such as Project 844) and co-ordinates with ministries and agencies. Key support to MOST is provided by other line ministries, such as the Ministry of Planning and Investment (MPI) which is responsible for attracting corporate and foreign investment, the Ministry of Finance, the Ministry of Education and Training, as well as the Ministry of Labour, War Invalids and Social Affairs and the Ministry for Information and Communications. A series of recently established implementation agencies have been tasked with executing Viet Nam’s start-up programmes2 (Figure 5.6):
The National Agency for Technology Entrepreneurship and Commercialization Development (NATEC) was established in 2011 under MOST to advise and assist the state management of developing technology markets and businesses in science and technology sectors, including innovative start-ups.
The National Start-up Support Centre (NSSC) was founded in 2019, under NATEC, as a specialised implementation body that oversees the network of start-up support centres across Viet Nam, undertakes activities to boost connectivity between start-ups and investors, conducts training and provides technical support to local governments.
The National Innovation Centre (NIC) was set up under MPI in 2019, and will entail the construction of a USD 32 million campus on the outskirts of Ha Noi starting in 2021. It will provide purpose-built, modern facilities to start-ups and form a central node connecting Viet Nam’s open innovation actors. Alongside future access to co-working spaces, laboratories and a digital experience centre, start-ups already benefit from online training courses, consulting services and connection to private incubators, investors and universities.
Viet Nam’s provincial governments (and centrally-run city governments) play an important role in start-up policy given the country’s decentralised governance structure. Local governments are responsible for issuing their own regulations to support start-ups, based on national plans, and for disbursing support. The SME Law and Decree 39 designate Provincial People’s Committees as responsible for allocating resources to local SMEs according to their own budgetary decisions, for managing state investments and for making investments from local government budgets. This is in line with a growing tendency in Viet Nam towards fiscal decentralisation. Between 1975 and 1989, Viet Nam’s spending was fairly centralised with limited own revenues for local governments, but since 1989 local governments are able to raise own revenues in accordance with sharing agreements. Budget laws in 1998, 2002 and 2015 aimed at giving more autonomy to local governments, defining the revenues that can be raised locally (e.g. land fees and charges), shared between central and local governments (e.g. VAT) and budgetary transfers from central to local governments. In 2021, about 67% of budgetary expenditures took place by local governments, but this varies by area of spending. For instance, in education, almost all expenses are incurred at the local level (94%), while the rate for science and technology expenditures is 26% [authors’ elaboration based on Ministry of Finance, (2023[26])]. In addition, local governments also run their own start-up/innovation support organisations (about 35% of these are run by local level) and set up platforms for information and networking, such as SIHUB and the Ho Chi Minh City Centre for Business Development and Support (CSED) and the Business Startup Support Centre (BSSC). Finally, local governments in Viet Nam can also act as spaces for policy pilots. While local governments are mostly tasked with implementation responsibilities, there is some space for experimentation to define new policies. In the case of start-ups, for example, this is taking place in Ho Chi Minh, where the city has been implementing since 2023 its own set of tax exemption and reduction policies for start-ups operating in specific sectors and innovative activities. The results of this effort will inform central policymaking, with the possibility for these policies to be adjusted and implemented at national level, should they prove successful.
Note: At the time of this report’s publication process, the government was undergoing a restructuring which will impact on the institutional matrix displayed. NIC (National Innovation Centre), NATIF (National Technology Innovation Foundation), NSSC (National Startup Support Centre), AED (Agency for Enterprise Development), SMEDF (SME Development Fund), CGF (Credit Guarantee Fund), NATEC (National Agency for Technology Entrepreneurship and Commercialization Development), NASATI (National Agency for Science and Technology Information), PCA (Provincial Cooperative Alliance), PUSTA (Provincial Union of Science and Technology Associations), FF (Fatherland Front), Dep. I&C (Department of Information and Communication), Dep. I&T (Department of Science and Technology), Dep. A&RD (Department of Agriculture and Rural Development), PJD (Provincial Justice Department), SBV (State Bank of Viet Nam), SPB (Social Policy Bank), VBARD (Viet Nam Bank for Agriculture and Rural Development), ICB (Industrial and Commercial Bank).
Source: Authors’ elaboration based on official sources.
Despite progress on strengthening the legal environment, hurdles remain that constrain venture capital investments in the country. Currently, many start-ups are registered in Singapore where they face fewer constraints in attracting investments, a common trend in Southeast Asia, and operate their start-ups as subsidiaries in Viet Nam. Issues such as allowing for and regulating the use of common venture instruments, such as stock options and convertible loans, including for foreign investors, will be important for increasing local investments. Additionally, it will be important to expand exit options, such as IPOs for start-ups. Currently the two stock exchanges – the Ho Chi Minh stock exchange (HOSE) and the Ha Noi stock exchange (HNX), established in 2000 and 2003, respectively – have stringent requirements that start-ups are often unable to meet. Setting up markets that target technology companies could better respond to this need.
Existing regulations also prevent the large-scale employment of financing support to start-ups, as part of Viet Nam’s public policy mix. Two main issues make direct support to start-ups difficult: first, while there is a definition for start-ups used in the SME Law, this can be challenging to implement as it can be left open to interpretation; second, while the state is able to make investments in start-ups, the 2014 Law on the Management of State Capital makes it difficult to suffer losses and hence is ill-suited to risk investments that carry a chance of failure.
Nevertheless, there are some instruments available to start-ups in the country:
Credit guarantees through the Credit Guarantee Scheme (CGS) and subsidised loans through the SME Development Fund (SMEDF) (up to 80% of commercial interest rates and up to 80% of proposed project, up to VND 1 billion for SMEs that are innovative or part of clusters/value chains). However, these are not geared towards enterprises that may face liquidity issues (such as start-ups), as they must possess 20% of the capital they need to borrow or guarantee (OECD, 2021[16]; Dang and Chuc, 2019[27]).
Loans and guarantees to enterprises, organisations and individuals for research innovation purposes through the National Technology Innovation Fund (NATIF).
Seed financing through provincial schemes. For instance, the Business Startup Support Centre (BSSC), owned by Ho Chi Minh City, offers integrated incubation services with both financing (up to VND 2 billion per start-up) and mentoring services, in addition to various international networking events.
As a result, Viet Nam’s public policy mix for start-ups is mostly geared towards providing support services to start-ups, such as training and capacity building. These services are often financed by the government and provided by academic and private sector institutions, such as the Viet Nam National University Ha Noi, BK-Holdings, the Business Start-up Support Centre and VSV Accelerator (Vietnam Economic News, 2018[28]). A further programme, Project 939 (Decision No.939/QD-TTg) has been encouraging women since 2017 to start businesses through capacity building, legal support and developing networks. It is overseen by the Viet Nam Women’s Union and supported by 4 government ministries and other government-affiliated socio-political organisations including the Viet Nam Cooperative Alliance and the Fatherland Front. The country has also supported the creation of venture capital networks such as the Vietnam Innovative Entrepreneurship Network (VIEN). Viet Nam has also placed emphasis on raising the visibility of its start-up ecosystem and shifting mindsets. Quickly becoming a fixture in the Vietnamese start-up calendar, TechFest is an annual start-up festival that began in 2015 and has grown to welcome 8 000 start-ups and venture capital investors in 2022 (Vietnam Investment Review, 2022[29]). In parallel, there is an effort to integrate start-ups into the curricula of secondary schools, colleges and universities and support the creation of start-up clubs, spearheaded by the Ho Chi Minh Youth Union (through Decision No.1665/QD-TTg).
Note: MPI (Ministry of Planning and Investment), MOST (Ministry of Science and Technology), NIC (National Innovation Centre), VDB (Vietnamese Development Bank), NATEC (National Agency for Technology Entrepreneurship and Commercialization Development), NASATI (National Agency for Science and Technology Information), MIT (Ministry for Industry and Trade).
Source: Authors’ elaboration based on official sources.
In addition, tax incentives are also used to stimulate investments in start-ups. The standard corporate tax rate is 20% in Viet Nam. The Investment Law (Law No.61/2020/QH14) and the SME Law have announced that start-ups are eligible for investment incentives, although no specific incentive has been unveiled. Nevertheless, start-ups might benefit from incentives available to all firms, such as lower rates (15%) or an exemption from paying taxes for four years and a subsequent 50% reduction in the tax rate for nine years if they set up in geographical areas that are disadvantaged, or in economic and hi-tech zones or if they engage in the high-tech sector, produce software or engage in R&D for instance. Further tax incentives such as free registration and tax consultation services for SMEs exist in a small number of local provinces, alongside access to free production space (UN ESCAP and Agency for Enterprise Development, 2021[30]). Ho Chi Minh announced through Resolution No.98/2023/QH15 a pilot for start-ups that includes a CIT exemption of five years for start-ups, scientific and technological organisations, innovative centres and intermediaries supporting innovation and entrepreneurship, an exemption for organisations and individuals on the income from capital invested into start-ups, together with grants for the city budget to cover the cost of incubation projects (Figure 5.7).
Despite the inexorable expansion of start-up ecosystems globally, women start-uppers are fewer than men (Startup Genome, 2023[31]). According to analysis on data from Crunchbase, globally, only about 19.1% of start-ups had at least one female founder in 2023. There are important regional differences. Asia, for instance, has the lowest share of female-led start-ups among geographic regions (15.4%), with the EU-27, Africa and LAC at around 17% (the United States stands at 23%). Still, with Asia being far from a homogeneous region there are important differences across hubs, for instance, from the Philippines with 26% to Japan with 10% (Figure 5.8).
In Viet Nam, female-owned start-ups made up 17.4% of all, similar to peer hubs in Indonesia, Thailand and Singapore. In Viet Nam female-owned start-ups were more likely to concentrate in business services (15% of start-ups vs 10% for male-owned ones), e-commerce (14% vs 11%) and education (6% vs 4%), compared to engaging in IT and software (19% vs 22%), and fintech (9% vs 14%), similar to trends in Thailand, Indonesia, India and China. Scaling up is also not easy for female-owned start-ups. While female-owned start-ups tend to be represented in financing rounds in similar numbers to their overall population in the ecosystem, they are less represented among firms that receive late-stage financing, including unicorns. As a result, they tend to receive even less financing. Globally, the share stood at around 13%, with the lowest in the EU-27 (7%) and the highest in LAC (31%), while in Asia the share hovered around the global average. Viet Nam has one of the lowest shares of VC going to women-owned firms in Asia at 4.4% of total, three times lower than in India (13%) and China (12%) and much less than Singapore (15%), and Indonesia, the highest among Asia’s larger hubs (31%).
Start-ups with at least one female-founder as a share of start-ups (2023) and venture rounds (2021-23), top 20 hubs by total number of start-ups globally and selected Asian ones
Note: Only active start-ups that were founded between 2014 and 2023. Asian hubs are shaded in green, all other hubs in orange. India, China, Korea, Japan and Indonesia are among top 20 hubs by number of start-ups globally. Malaysia, Philippines, Viet Nam, Bangladesh and Pakistan are selected additional Asian hubs featured in the figure. A venture round is an event when a start-up receives a venture capital investment (including angel funds in this report) from an investor.
Source: Authors’ elaboration based on Crunchbase, (2024[3]), database, https://www.crunchbase.com.
Note: Only active start-ups that were founded between 2014 and 2023. "Female" indicates a start-up with at least one female founder. "Male” indicates an entirely male-founded start-up.
Source: Authors’ elaboration based on Crunchbase, (2024[3]), database, https://www.crunchbase.com.
In Viet Nam initiatives have emerged to support the development of female start-ups. Project 939 (Decision No 939/QD-TTg on "Supporting women entrepreneurs in the period of 2017-2025'') encourages women to start businesses through capacity building, legal support and developing networks. It is overseen by the Viet Nam Women’s Union and supported by four government ministries and other government-affiliated socio-political organisations including the Viet Nam Cooperative Alliance and the Fatherland Front. Such initiatives are complemented by grassroot initiatives such as the Women’s Initiative for Startups and Entrepreneurship (WISE), an NGO founded in 2017 to support women-led start-ups and enterprises in Viet Nam through mentoring, training and incubation/acceleration services. In OECD member countries, similar efforts are springing up by local ecosystem builders, such as Tech Nordic Advocates, a tech community with a focus on Nordic and Baltic regions, which offers various mentoring, acceleration and business matching programmes for women start-uppers. In other cases, such initiatives have been fostered with public support. For instance, in Enterprise Ireland, the public agency in charge of supporting entrepreneurship in the country, and KPMG set up Going for Growth in 2008 to strengthen start-ups among women. It is a six-month part-time programme that organises peer sessions so that founders can learn from each other and build a community. Viet Nam could look to strengthen existing actions by designing specific tools or earmarking existing support for women. For example, Start-up Chile through its female founder factor programme, aims to funnel at least 50% of its seed funding (Build) to women-led start-ups and increases the co-financing provided by its start-up fund (Ignite) from 80% of the project to 90%.
Viet Nam is on track to become an important player for start-ups in Southeast Asia. The country points to continuing to improve regulatory frameworks to bring the country increasingly in line with global practices. To unleash its potential, Viet Nam should consider:
Updating and modernising the policy mix. Viet Nam would benefit from an update of the policy mix for start-ups to increase the typology and diversity of tools used to foster start-ups. The current mix focuses on providing services to start-ups, business matching and raising awareness on the emerging start-up culture. Complementing these tools with instruments to provide financing and demand-oriented tools could open up possibilities for the country to support start-ups in technological areas that are characterised by high risk and learning curves, where the nascent private sector venture capital scene is not yet mature enough to venture into or strengthen financing options for ideation and seed projects (see also (ERIA/OECD, 2024[20])). Advancing the regulatory framework reform will also be important for unleashing local private sector venture capital and strengthening their position to take advantage of late-stage deals. Attaching smart conditionalities could also support Viet Nam to galvanise investments towards priority areas in line with the overall development strategy.
Moving towards a collaborative mindset. The country’s ecosystem remains somewhat fragmented, with pockets of start-up activity that are not well-linked with other key actors of the ecosystem, including the manufacturing one. For instance, while Viet Nam is an important manufacturing hub in Southeast Asia, only 4% of Viet Nam’s start-ups are in manufacturing and hardware, and they have received a negligible amount of investment. The introduction of specific tools to connect different actors could allow start-ups to tap into new markets and help more established firms to benefit from the fresh ideas, products and services introduced by start-uppers. Countries with strong manufacturing systems are also already putting in place targeted tools in this respect (Box 5.3). Linkages could also improve with respect to universities and public agencies, in line with Viet Nam’s vision of open innovation. For instance, strengthening demand-oriented tools could be an option for enabling public agencies to leverage start-ups as potential solution tanks, while at the same time scaling up demand for start-up services. In terms of collaboration with academia, it would be helpful to introduce regulations for university spin-offs to provide clearer guidelines for these types of firms and increase incentives for the commercialisation of academic research. Finally, tapping into international partnerships can help to diversify funding sources and increase knowledge flows, including cross-border exchanges (Box 5.4).
Ensuring local governments are up to the challenge. While Viet Nam’s policy setting and fiscal decentralisation framework leaves ample space for local governments to design their own policies and budgets for supporting start-ups, in practice the capabilities and resources to do so are highly concentrated among the most developed regions. Going forward it will be important to raise the capacity of local officials to conduct strategy-setting and project implementation when it comes to start-ups, as well as to ensure they are well-resourced. Collaboration among cities could also be a game-changer, particularly as the boundaries of innovation ecosystems often transcend administrative ones.
The Global Green Growth Institute (GGGI) is an inter-governmental organisation established in 2012 that aims to support low-carbon resilient growth in developing and emerging economies. It is based in Seoul, Korea and its 44-country membership spans all global regions. GGGI has been present in Viet Nam since 2012, supporting circular economy initiatives, including infrastructure and green finance. GGGI has also worked with the Small and medium enterprises development fund (SMEDF) to develop criteria for green growth, gender equality and innovation for prioritised projects for the fund.
GGGI with the support of the European Union is currently in the conception phase of a new project to support Viet Nam’s start-ups as they strive to meet the country’s energy efficiency goals. The project will draw on the Institute’s expertise in supporting green start-ups globally through its Greenpreneurs initiative. It aims to contribute to Viet Nam’s target to reduce carbon emissions by 5-7% in industry, transportation, and buildings by 2025, as outlined in Viet Nam’s Green Growth Strategy 2021-2025 (originally adopted in 2012). The main activities of the project include:
Setting up a 3-6 month acceleration programme and start-up competition
Supporting the start-up ecosystem through networking, knowledge sharing and information dissemination
Making recommendations for policy initiatives that could be used to foster energy efficiency start-ups
Source: Information collected from the Global Green Growth Institute in the framework of the Start-up Viet Nam High-Level Roundtable, organised online on 17 March 2023 under the framework of Start-up Asia: Chasing the Innovation Frontier - the Case of Viet Nam.
Countries with strong manufacturing ecosystems are undertaking targeted public and private sector initiatives to better connect start-ups to producers, with the purpose of harnessing start-ups’ innovative business ideas to transform manufacturing and open opportunities for start-ups in terms of capital and markets.
The EIT Manufacturing Venture Building Program
The EIT Manufacturing Venture Building Program, supported by the European Institute of Innovation and Technology (EIT) and co-funded by the European Union, encompasses a 9-week virtual initiative for high-growth industrial start-ups. Introduced in 2023, it includes workshops with experts, personalised mentoring sessions, and networking events. The programme accepts applications from multidisciplinary teams addressing critical challenges in manufacturing, particularly within EU priority sectors like batteries, hydrogen, electronics and solar, materials, semiconductors, automotive, and machinery and equipment manufacturing. Start-ups must have an active equity fundraising strategy. Successful applicants gain access to venture funding of up to EUR 500 000 through EIT’s venture programmes.
The J Bridge Program
The J Bridge Program is operated by the Japanese External Trade Organisation (JETRO) and serves as a business platform fostering cross-border open innovation. The programme provides opportunities for foreign start-ups and companies to engage with Japanese businesses through targeted meetings and events. To qualify for J-Bridge, start-ups should also meet desirable conditions such as major VC funding, experienced leadership, technological superiority, and collaboration experience. In addition start-ups should operate in the following two fields:
Digital, including Mobility, Health Tech, Life Sciences, Agri-Tech, Retail Tech, Smart Cities, FinTech, Robotics, Information Security;
Green, covering Renewable Energy, Energy Conservation, Storage Batteries, Hydrogen, Smart Infrastructure, and Environmental Conservation Technologies.
The Singapore PACT scheme
Singapore introduced the Partnerships for Capability Transformation (PACT) scheme in 2010 to encourage linkages between original equipment manufacturers (OEMs) and their suppliers. The scheme allows OEM suppliers to defray up to 50% of costs incurred in bringing their procedures into compliance with the OEM’s requirements. The scheme also offers wage support for OEMs (up to 70%) to hire and train managers who handle the process of identifying and managing procurement. It also covers productivity improvements and knowledge transfer, as well as co-innovation activities, such as joint product development between OEMs and suppliers and joint business development. In 2018, PACT was extended to cover start-ups, instead of partnerships between large firms and SMEs only.
Source: Authors’ elaboration based on EIT (2023[32]), https://www.eitmanufacturing.eu/what-we-do/business-creation/team-contact/; JETRO (2023[33]), https://www.jetro.go.jp/en/j-bridge/ and MTI (2023[34]), Partnerships for Capability Transformation (PACT) What is it?, https://www.mti.gov.sg/-/media/MTI/COS-2022/Media-Factsheets/MTI-COS-2022-Media-Factsheet---Partnerships-for-Capability-Transformation.pdf.
Viet Nam is the third largest start-up hub in Southeast Asia in terms of venture capital investment and number of start-ups. The start-up scene, mainly centred in Ha Noi and Ho Chi Minh, shares many common features with its Southeast Asian neighbours, including an orientation towards e-commerce and fintech and a large presence of foreign investors that are exploiting Viet Nam’s growing market. It also shares common challenges. For example, the start-up scene has developed in relative isolation from the country’s thriving manufacturing scene, with notable exceptions in a handful of renewable energy start-ups. In addition, women’s participation in start-ups remains relatively low. Viet Nam’s public policies have been crucial in kick-starting the start-up ecosystem in the country, bringing visibility, connecting players and supporting the country’s first incubators and accelerators. To advance, Viet Nam will need to step up efforts and continue regulatory reforms that will enable the country to follow best practices in start-up supports, diversify its policy mix and mobilise more resources. Putting in place smart conditionalities will also be needed to enable the start-up scene to utilise the country’s assets, including its manufacturing ecosystem, large firms, and academia, and channel efforts towards meeting the country’s sustainability and inclusivity goals.
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← 1. Non-State enterprises sector includes domestic capital enterprises, which capital is under private ownership of one person or group or where the state holds 50% or less of their charter capital. The following are types of non-state enterprises: private enterprises; partnership companies; private limited liability companies; limited liability companies with 50% or less of their charter capital shared by the state; joint-stock companies without state capital; joint-stock companies with 50% or less of their charter capital shared by the state.
← 2. The institutional matrix discussed in this chapter refers to the government as it was structured until the end of 2024. In 2025 a round of restructuring started and as a result the exact governance upon publication might differ from the one displayed here.