Vietnam’s Ministry of Planning and Investment (MPI) has shared a circular (a regulatory document, in Vietnam speak) for improving the legal environment for venture capital investing in the Socialist state. The circular is now – since 16th April – open for public comment. The aim of the circular is to improve the ease of setting up and running VC funds in Vietnam, and importantly for the MPI Agency for Enterprise Development (the AED), make it easier and more attractive for angels and VCs to invest in Vietnamese start-ups.
Vietnam’s promising start-up ecosystem. 500 Startups announced their $10 Vietnam fund in March, while FPT Ventures has a Seed Fund and Golden Gate Ventures maintains a rep focused on Vietnam. Another Vietnamese government arm, the Ministry of Science and Technology (MoST), published their intention to launch a VC fund in 2015.
The early-stage funding comes as a welcome addition – for Vietnamese start-ups between Ho Chi Minh City and Hanoi – as there is a modest number of PE/VC funds operating in the region, and they have tended to invest in more established businesses. The VCs operating in Vietnam since the early 2000s are: Mekong Capital, IDG Ventures Vietnam, Dragon Capital and DFJ Vina Capital.
The government’s embrace of equity funding for Vietnamese start-ups represents a change in the funding landscape. Through 2014, public efforts to support venture capital and entrepreneurship primarily focused on increasing the availability of credit for start-ups. Though Vietnamese policy-makers had ambitions of making Vietnam more “Silicon Valley-like”, they translated the idea of venture capital investing into debt finance.
Amongst other proposed changes are such that its quicker and easier for VC funds to be set up. Existing regulations limit VC fundraising as the minimum fund size has been VND50 billion. Going forward, fund structures can be set up with smaller sums and:
- VC funds can be set up within three days
- Funds will not be regulated by the Securities Law in Vietnam
These regulatory changes represent an improvement in the legal environment for start-up fundraising in Vietnam. And, arguably more importantly, they indicate the Vietnamese governments further understanding in start-up financing, and interest in improving the start-up ecosystem.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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