Startups are well-positioned to breathe further life into Vietnam's economy if entrepreneurs have what it takes.
Business conferences and events these days often feature talk of the latest startup receiving hundreds of thousands of dollars in investment. The success stories of Facebook, Apple, and Uber push many a budding entrepreneur to try their hand at getting a startup off the ground. The thought that “I can create something great” comes from their innovative nature and success could drive the country’s economy forward.
The startup ecosystem is now much stronger than it was three years ago, according to Mr. Pham Quoc Dat, Director of the HATCH! Program. “Initially it was startup founders and venture capitalists (VCs) who played active roles in the ecosystem, but now there are many more players,” he said. “Not only has the number of entrepreneurs and VCs targeting Vietnam increased, there are more startup incubators and accelerator programs, more sources of funding from both private (angel investors) and the public sector (in projects like IPP, BIIP and VIIP), and there are dedicated media channels and network connectors.”
A key factor is financial resources. Vietnam has proven it has potential for investment in recent times, Mr. Quoc Dat believes. It is a young and rapidly-growing economy with hubs for innovation (Hanoi, Ho Chi Minh City, and Da Nang). This is supported by the high rate of internet and mobile access, plus a willingness to implement and adopt new products and services.
The Vietnamese Government is more open to adjustments to policies and meets more frequently with startups in Vietnam to understand their needs. “The ecosystem has received support over the last two years not only from the private sector but also received greater attention from the public sector,” Mr. Quoc Dat said.
Human resources, also a critical factor, though lacking certain skills at the moment, actually have the qualities to create something huge. “There are plenty of good ideas among Vietnamese startups but people need more methods and advice on how to go global, how to speak to investors and so on,” said Mr. Yoann Fauché, Co-Founder of Uniity, an incubator, and Echoes.xyz (a startup and winner of Tech in Asia Hanoi 2015). “Vietnamese are hard workers and if you take some time to share with them they share everything and try to progress with you,” he added. And he believes that foreigners like him have a lot to learn from the strength and positive attitude of Vietnamese.
To connect all the factors are community builders. They may not be entrepreneurs or investors, but without their role the startup system would not have the growth it sees today. “Community builders are the connectors, who call for support and introduce entrepreneurs to resources, which saves them much time in finding the right partners for their businesses,” said Mr. Dat.
Looking at the bigger picture, the role of startups has been contributing to Vietnam’s economic development. “We have 500,000 active enterprises, 97 per cent of which are small and medium-sized enterprises (SMEs), and we also have well-developed internet infrastructure,” Deputy Minister of Planning and Investment Dang Huy Dong told the HATCH! Fair 2015 and IPP Mid-term Demo. “And, more importantly, we have a young, creative workforce with many Vietnamese engineers who contribute to the development of famous software around the world.”
These factors can give Vietnamese startups a significant profile internationally and a value in the billions of dollars in the future, according to Mr. Dong. This is something worth looking forward to, as at the moment Vietnam already has successful startups extending to foreign markets, creating jobs and contributing to economic development, such as Vatgia, Appota, Coc Coc, Joomart, and Foody. The growth potential of startups is there to be exploited.
Positives & negatives
With the explosion of the startup trend many anticipate the positive impact it may have on Vietnam’s economy and the development of the new generation of entrepreneurs. Experts, though, are wary of the negative factors accompanying the startup movement. Mr. Tran Quoc Khanh, a famous blogger on entrepreneurship, actually views it as a “dangerous trend”.
The media is full of stories that “Vietnam is an attractive destination for investment” and “Vietnam is developing, so the business opportunities are great”. Mr. Khanh agrees with the sentiment but believes it’s not applicable to everything. The media, he said, also report on “thousands of enterprises being dissolved”, “difficult business conditions”, “low competitive capacity”, and other ills.
The stories of the success that came the way of Steve Jobs, Bill Gates, and Mark Zuckerberg make too many entrepreneurs become deluded about what they themselves can achieve. Entering into a highly competitive market place requires resources and the right mentality, both of which many budding entrepreneurs lack.
Agreeing that there are negatives to be considered, Mr. Bui Huy Thang, CEO of BraveBits, said that most startups will fail and in a painful way. Not everyone is cut out to be an entrepreneur and some people can’t cope with the pain of failure and lose all their passion. Part of being an entrepreneur, he said, is being mentally prepared.
Companies also suffer when success fails to arrive. “One obvious effect is that it becomes difficult to retain employees and find new ones, because many then turn their attention to building their own startup,” he said, emphasizing the importance of human resources in the sustainability of an organization.
Views differ, as they do on most business matters, and the debate will continue. “For us, starting up a new business is for true entrepreneurs who have a passion for their innovation as a solution to a particular market problem,” Mr. Quoc Dat said, acknowledging there are different attitudes toward the startup trend. “Some people know they are not entrepreneurs but others will only know by trying,” he explained. What is important is that any failure sharpens the entrepreneur’s skills and mindset, and that they continue to be brave and accept that nothing may come from their investment and effort.
According to Mr. Quoc Dat, starting up is about creating something from challenges. Innovation won’t come if there are no challenges to face and the economy stagnates as a result. Vietnam needs SMEs to thrive, as they created 51 per cent of all new jobs and contributed 40 per cent to GDP in 2014, according to the General Statistics Office.