Vietnamese start-ups still busy amid pandemic

Start-ups need to take full advantage of technology. Photo: H. Duu

Flood of capital

Covid-19 is a "test" for all businesses, and start-ups are no exception. Even in the context of many businesses facingtrouble, many start-ups still receive millions of USD in capital from funds or foreign enterprises.

Thanks to seizing opportunities, BuyMed– a medical technology start-up in the field of online pharmaceutical distribution which ownse-commerce site thuocsi.vn– has successfully raised US$2.5 million in Series A funding, led by Sequoia Capital India with Genesia Ventures and Cocoon Capital, brings total investment to US$3 million. A representative of this start-up said that the development of super applications in the pharmaceutical industry in particular and healthcare in general is "an arrow that hits many targets", because healthcare is a very potential market due tosmall supply, the needs of people are great, especially in the context of the pandemic.

Similarly, a number of start-ups in the fields of health, pharmaceuticals or industrial hygiene are also benefiting from the pandemicthanks to rising market demand. However, in that difficult context, many Vietnamese start-ups in seemingly "unrelated" fields are still stronglyattracting investors.

Recently, Vietwash– a car wash chain – has just announced capital mobilization worth US$1.7 million from South Korean energy group GS Caltex, equivalent to an 11.56%stake. This isstart-upwas established in 2014, operating more than 50 car washesnationwide. The additional capital is expected to help this company to have more than 100 stores nationwide by 2022.

Previously, a start-up in the financial sector, Wee Digital, also announced that it had successfully raised capital from South Korean venture capital fund InterVest and VinaCapital Ventures with the figure of up to millions of USD. A Wee Digital representative said that in the future, it will focus on cooperating with bank customers in applying biometric solutions for a wide range of banking services, helping to provide users with a seamless and easy experience. According to representatives of the venture capital fund InterVest, with market potential as well as a technology background, Wee Digital has the ability to create a breakthrough.

However, if you look at the overall picture of domestic start-ups, there are difficulties. A founder of a start-up business on green geographical indication for the fruit and vegetable industry said that the pandemic startedat the time that businesses were preparing to receive the cooperation and investment of foreign investors from Singapore. But regulations on social isolation and temporary shutdown of commercial flights have delayed cooperation. In addition, many start-ups in some areas of technology and smart devices do not have output for products. This makes it difficult for start-ups.

Unlock resources for entrepreneurship

Talking about the difficulties of start-ups, Ms. Nguyen Quynh Tram, Country Director (Vietnam, Laos and Cambodia) of Google, said that many challenges are slowing the development of a creative start-up ecosystem in Vietnam. Typically, there is a lack of capital for technology start-ups, most start-ups have to reach the later stage of the start-up process to access capital, and in the initial steps, it is often very difficult, so it is necessary to promote access to capital for these businesses through venture capital funds. In addition, start-ups still lack resources, training is not close to the actual needs of businesses, so it is necessary to promote public-private partnership in training human resources. Moreover, the legal corridor for creative start-ups has not kept up, so there should be a more supportive and friendly approach to start-ups.

Sharing his experience in Malaysia, Mr. Fadzli Shah, Chief Strategy Officer, Digital Economic Group Malaysia (MDEC), said that small and medium enterprises are always the driving force to promote development and create jobs for the majority of workers. Therefore, the Malaysian government and private entities have implemented many solutions to support start-ups. The first is onissues such as raising awareness from the initial steps for businesses to grasp entrepreneurial skills and business leadership skills. Besides, there are many programs and activities to support small and medium enterprises to gainknowledge about e-commerce until these businesses are more "mature".

According to Mr. Fadzli Shah, start-ups had to "struggle" to be able to continue to advance in the market amid the Covid-19pandemic, so the "leverage" originally from the Government and supporting organizations will help these businesses grasp the situation, find ways to overcome difficulties, create opportunities for businesses to rise up, innovate and transform risks into opportunities.

From the above issues, Mr. Pham Dung Nam, Director of the Office of the Support Innovative Start-up Ecosystem in Vietnam until 2025 (Project 844), the Ministry of Science and Technology, said that the Covid-19pandemicwill pass, but in an open, multidimensional and interdependent world, the national start-up ecosystem desperately needs regional and global connectivity. In order to form a community of really strong start-ups, capable of providing Vietnamese-branded products and services with high quality and sophistication, dominating the domestic market and reaching out to the regional market, policies forstart-ups should be calculated so that there is no spread of investment, no general movement support for starting a business, it is necessary to have a strategic roadmap combining short and long-term policy solutions, focusing on innovative start-ups with high growth potential in some priority areas of the economy or develop products and services that have unique strengths of regions or countries.

In addition to financial resources, innovative start-ups need to be supported by a favorable hard and soft technical infrastructure. More importantly, according to Pham Dung Nam, start-ups need to foster a culture of daring to take risks, challenge and tolerate failure as an inevitable stepping stone to success.

However, for a country influenced by traditional Asian cultures like Vietnam, changing people's thinking and start-up culture takes time and a roadmap, starting with the long-term oriented policies of the State. According to the Ministry of Science and Technology, in 2019, the number of incubators to promote business in the country has 61 organizations, the number of co-working spaces has reached 170 organizations, whichwill be one of the factorsto help start-ups grow.