Policy bottlenecks must be untangled for investors and investment funds to play a more extensive role in Vietnam’s startup space.

Vietnam’s startup
scene is entering a new phase of development, marked by noticeable improvements
in project quality and more active participation from major corporations. For its
ecosystem to truly break through, however, it has become increasingly urgent to
remove legal bottlenecks and strengthen the operational capacity of investment funds.

At a discussion
held within the recent launch of the National Startup Project Development Program,
also known as Startup Festival 2025, Mr. Nguyen Tien Trung, Vice Chairman of the
National Startup and Innovation Advisory Council (VSMA), said that, within the innovation
ecosystem, investors and investment funds are often described as the “lifeblood”
of startups – particularly during the high-risk early stages. While this role is
widely acknowledged, the reality is that establishing and operating investment funds
in Vietnam still faces numerous challenges.

Structural constraints

According to Dr.
Nguyen Van Truc, Director of the Center for Training and Technology Market Development
Support within the Department of Startup and Technology Enterprises at the Ministry
of Science and Technology, the innovation ecosystem comprises multiple stakeholders,
including the government, businesses, research institutes and universities, advisors,
and investment funds. But for many years, Vietnam has lacked specific regulations
governing venture capital funds, making it difficult for many startups to access
formal sources of capital.

Administrative barriers
have also posed a persistent challenge. In the past, procedures for establishing
and implementing investment fund schemes were highly complex, at times involving
as many as seven separate steps. Training and capacity-building stages alone consumed
substantial time and resources, slowing the flow of capital into the market. This
partly explains why Vietnam’s startup investment market remains relatively modest
in scale compared with other countries in the region.

Dr. Dam Quang Thang,
Chairman of the VSMA, noted that private funds operating under Decree No. 38/2018/ND-CP
have faced significant limitations, resulting in less-than-optimal performance.
A lack of appropriate investment thinking, particularly an insufficient understanding
of the risks inherent in innovative startups, combined with weak fund management
capacity has directly constrained the effectiveness of capital deployment.

From the perspective
of a foreign investor, Mr. Davide Cali, Director of Crossfund, said Vietnam benefits
from strong GDP growth and a young, enthusiastic workforce, but the biggest deterrent
for foreign capital lies in an unstable legal environment as well as regulatory
frameworks that are still in transition. Procedures for accessing foreign investors
are sometimes insufficiently open, with unclear implementation steps. The language
barrier, in particular, has caused many startups to lose competitiveness when seeking
international funding.

One seemingly “technical”
yet decisive issue is the corporate structure of startups. International funds are
often wary of unclear or non-standard capitalization tables, or structures involving
too many small shareholders. In practice, many startups have already raised capital
but lack clear agreements among founders or fail to adopt structures aligned with
international standards. Spending six months to a year restructuring these issues
frequently leads to unfortunate outcomes, with investment deals collapsing midway.

Mr. Le Thanh, Founder
of the Vietnam Future Fund, added that local founders lack an effective “bridge”
to understand the stringent requirements of foreign funds. While many companies
have market-ready products, their strategic vision and ability to communicate in
an international business language remain limited, falling short of global market
expectations.

New moves

Against this backdrop
of institutional constraints, the issuance of Decree No. 264/2025/ND-CP on October
14, 2025, governing national and local venture capital funds, is widely seen as
a major turning point.

Dr. Truc said this
marks the first time Vietnam has introduced a relatively comprehensive legal framework
for venture capital investment, creating a crucial driver for mobilizing social
resources. “Decree No. 264 not only provides a legal corridor for venture capital
funds to operate more transparently and effectively, but also opens up opportunities
for universities and research institutes to establish their own startup investment
funds,” he said. “This will significantly accelerate the commercialization of scientific
research results; a valuable resource within the ecosystem.”

The Decree is expected
to offer a critical “boost,” helping remove institutional bottlenecks and create
more favorable conditions for the formation and growth of startup investment funds.
In turn, this should support a stronger and more sustainable innovation ecosystem
in Vietnam in the coming period. The combination of public and private resources
to form funds with clear legal status at both the national and local levels is also
expected to make capital mobilization more stable and efficient.

In parallel, Decree
No. 210/2025/ND-CP, issued on July 21, 2025 and amending Decree No. 38 on investment
in innovative startups among small and medium-sized enterprises, has addressed shortcomings
in earlier regulations and created more favorable conditions for private funds.
These changes are likewise expected to ease institutional bottlenecks and promote
sustainable ecosystem development.

To fully capitalize
on policy opportunities, experts said changes are needed on both sides: regulators
and the startups themselves. For startups, Mr. Cali advised founders to be in a
state of “maximum readiness.” This means not only having a strong product but also
proactively “cleaning house” by ensuring transparent corporate structures and professional
internal agreements. A concrete and realistic plan is essential to avoid missing
opportunities when investors come knocking.

“Investing in startups
is not just about money, it is also an investment in people and team capabilities,”
Mr. Cali said, adding that the Vietnamese Government should continue to play a leading
role in the ecosystem. Stronger links with innovation centers, including international
hubs, are needed to bridge domestic and global capital flows.

Mr. Tran Van Le,
Chairman of the Phuong Linh Group, stressed the importance of self-mastery and viable
business solutions. Startups must turn ideas into “products” and tell their project
stories convincingly enough for investors to be willing to “buy.” Founder capability
and competence, he said, are decisive factors.

Similarly, Mr. Hoang
Cong Doan, Chairman of the Song Thao Group, said capital is not the most important
factor at the starting line. “If you go in the wrong direction, the more capital
you have, the faster you fail,” he explained. Rather, startups need clear strategies,
breakthrough ideas, and guidance from experienced mentors to avoid fundamental management
mistakes.

At the ecosystem
level, experts said the government should continue to play a guiding role by strengthening
links between domestic and international innovation centers. Creating these capital
bridges will help Vietnamese startups more easily access global standards and knowledge.

VET-Vu Khue