Startups seek ways to access capital resources

According to Ho Trong Lai, Chairman of strategy consultancy Heaven Light, SMEs and startups find it hard to access capital because they do not have information about the sources of funding, do not know how to go about soliciting funding from investors and lack the salesmanship needed to sell their ideas to investors.

Many entrepreneurs complain that they do not know where to go to look for capital or how to meet with investors.

Lai said it is like a student coming and asking where they can get scholarships.

“You have to do your homework first. Nowadays there are a lot of organisations who can help you with the information; you can find them online very easily.

“You can just Google everything. It is not difficult or technical.”

To raise capital, entrepreneurs must at least know how to make a business proposal like a graduate looking for job must know how to make a CV, he said.

Funds are now available more than ever before, and the problem is how a start-up entrepreneur can make a pitch that investors want to listen to and then invest, he said.

Phan Dinh Tue, Vice President of Sacombank, said his bank does not have a special policy or loan package for startups, but instead treats them as small and medium-sized businesses.

The requirements for startups and micro businesses to get a loan are also strict, he said.

However, while big companies must submit their full financial statements for three years, banks are more flexible with startups and newly established small firms.

“A startup just established for six months, how they can possibly have a financial report?”

According to Tue, Sacombank has 100,000 business customers, 83% of them SMEs.

This year it earmarked VND3 trillion for SMEs at 2% lower interest than normal and has disbursed VND1 trillion so far, he said.

VPBank also lends to startups and SMEs.

Nguyen Thanh Binh, SME Division Director of VPBank’s Phu My Hung SME Centre, said in the last three years the bank has been offering unsecured loans to small firms and start-ups that have been in business for at least six months.

VPBank has lent to 40,000 businesses, and its loans outstanding are now worth VND5 trillion, he said.

He said to get a loan, SMEs and startups must meet certain criteria: the owner must have at least three years’ business experience and the company must have a good credit history.

But he said the most important factor is that it must be a going concern.

Businesses less than six months old can also get loans but not large sums, he said.

However, the interest rate cannot be too low because lending to SMEs is very risky, he said.