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Swiss EP Partner Summit 2024: Designing Growth of Vietnam's Startup Ecosystem

As the Swiss Entrepreneurship Program (Swiss EP) celebrates its ninth year in Vietnam and unveils its third phase with the Partner Summit 2024, the Program took this rare opportunity to envision the next chapter of Vietnam’s startup ecosystem.

From March 14 to 16, around 40 partner organizations (PO) and key ecosystem players with four Swiss EP entrepreneurs-in-residence (EIRs) gathered at Hoi An, an ancient city roughly 30 kilometers from Da Nang, Vietnam’s third startup hub and the up-and-coming ecosystem pillar of Swiss EP in Vietnam.

As the Swiss Entrepreneurship Program (Swiss EP) celebrates its ninth year in Vietnam and unveils its third phase with the Partner Summit 2024, the Program took this rare opportunity to envision the next chapter of Vietnam’s startup ecosystem and the path that lies ahead for each player.

From March 14 to 16, around 40 partner organizations (PO) and key ecosystem players with four Swiss EP entrepreneurs-in-residence (EIRs) gathered at Hoi An, an ancient city roughly 30 kilometers from Da Nang, Vietnam’s third startup hub and the up-and-coming ecosystem pillar of Swiss EP in Vietnam.

Looking back at the past ten years, Vietnam has made great strides in its innovation and entrepreneurship push, including advancing from a virtually non-existent startup ecosystem to a vibrant one that ranks 58th worldwide, according to the latest mapping of global startup ecosystem research center StartupBlink.

Only two hubs, Ho Chi Minh City (HCMC) and Hanoi, made it into StartupBlink’s top 200 ecosystems out of 1,000 cities in the world. This number seems insignificant in a country with a population of 100 million, said Tshimangadzo Nemurangoni, Startup Ecosystem Consultant at StartupBlink.

Having participated in the three-day summit, Nemurangoni gained a first-hand understanding of Vietnam’s startup environment and established necessary partnerships to improve data collection in the Southeast Asian nation. She strongly believed that Vietnam deserved more representation on the map.

“Vietnam's local ecosystem is not as popular as some of its surrounding countries in Southeast Asia,” she said, pointing to its 5th place in the regional ranking.

“But it is really exciting to come here and see the type of pressure that the ecosystem puts on itself to excel. It's important to be able to shine a light on what is happening on the ground.”

Vietnam is reported to house around 5,000 startups, including four unicorns valued at more than US$1 billion, and over 100 incubators and accelerators. With the presence of approximately 200 venture capital firms, Vietnamese startups have also weathered the global funding winter and secured a total of US$718 million from 96 successful deals last year, though significantly lower than its peak of US$1.54 billion in 2021.

SwissEP probably had a stake in this outcome. Over the past four years, the Swiss government-supported program has supplied experienced international entrepreneurs and experts to assist in capacity-building programs for 15 local POs. This resulted in 70 EIR assignments and 1,100 EIR days working with Vietnam’s ecosystem stakeholders, be they policy-makers, accelerators, incubators or investors.

The indirect results are even more exhilarating. Swiss EP POs-supported startups have created around 12,000 jobs, of which over 50 percent are for women, and raised approximately 124 million Swiss francs (~US$100 million).

“In the next four years, globally in our seven countries, we are going to do a lot more with scale-up programs and related to that, internationalization,” said Hub Langstaff, country manager of Swiss EP Vietnam.

“POs remain the main drivers and beneficiaries of Swiss EP and we're going to figure out how best to work with our partners on that.”

SwissEP will also emphasize areas such as innovation and climate-positive entrepreneurship, which align with the top priorities of SECO Economic Cooperation and Development, the sponsor of Swiss EP activities.

“We will work to facilitate commercialization and open innovation through linkages among startups, universities, corporates, and government,” added Hub. “Switzerland is known for being an innovative and entrepreneurial country so there are also a lot of capabilities that we can try to introduce to Vietnamese people and organizations.”

Private-led scale-up programs

Preliminary research by Swiss EP’s EIR Ha Thanh An showed that among 30 active startup support programs in Vietnam, more than half focus on the ideation phase, leaving only one dedicated to growth-stage companies.

As local startups try to expand, they encounter obstacles in securing later-stage funding, finding talent, handling a larger team, as well as selling to corporate clients and global markets.

“The problem with later-stage funds in Vietnam is that there’s still no good market for exit,” Vy Le, co-founder and general partner at Do Ventures, said at the Summit. “We have yet to see any successful initial public offering (IPO) cases for local tech companies.”

While this is partly attributed to the stringent regulatory landscape for public listings in Vietnam, additional efforts are required to strengthen startups’ inherent capabilities to achieve unicorn status or reach the exit stage. These metrics are often identified as the most important indicators of a mature startup ecosystem, besides the substantial funding amount and large pool of tech workers.

An believed that most growth-stage challenges could be overcome through tailor-made and one-on-one assistance. Accordingly, Swiss EP will partner with POs to source and pair startups with suitable EIRs from across the world.

“Imagine that all of us here have a chance to access those incredible resources of the 5,000 experts in the Swiss EP network, it could be a new service for the whole ecosystem and every stakeholder could advance with a growth mindset from the start,” An said.

This is, however, not the only focus that Swiss EP will be doing in the next four years, noted Nguyen Quynh Anh, manager of the program in HCMC. To achieve such growth levels, it is necessary to nurture a pipeline of early-stage startups that are able to scale up to that point, she added.

Incubators and accelerators, especially those supporting deep-tech, patent-based and climate-positive startups, are encouraged to remain active in the ecosystem and develop their own financially sustainable models, particularly as the economic slowdown led to a decrease in sponsorship and funding opportunities.

“I would ask you (startup support organizations) to consider not only one business model but do a mix of grants, program fees, equity, and other options,” said Helena Habdija, Educator, Mentor, Facilitator, Project Design and Swiss EP EIR. “It's up to you to see what works in your ecosystem.”

Policy-backed startup hubs

Vietnam's startup scene is progressing beyond its early stage. During this period, Nemurangoni from StartupBlink emphasized that the government's role should shift from a micro to a macro focus, laying the foundation for further success.

This is reflected in the efforts of provincial-level authorities to pioneer specific policies and incentives to foster local entrepreneurship amid the country’s innovation push.

The competition is heating up, especially among the three biggest cities.

Located across the northern, central, and southern regions, Hanoi, Da Nang and HCMC are widely recognized by foreign investors as the main talent and startup hubs of Vietnam.

The southern metropolis is putting into force the Parliament’s Resolution 98 on special mechanisms and policies aimed at advancing the city. Hanoi is also finalizing details of its amended draft law on the capital for tentative approval in May, while Da Nang is adjusting multiple special policies to bolster its growth until 2030.

Speaking at the Summit, Phan Thi Quy Truc, Deputy Head of Technology and Technology Market Management Division, Department of Science and Technology of HCMC, shed light on the city's efforts in implementing policy pilots that could potentially serve as a model for other regions in Vietnam.

“With Resolution 98 lasting for only five years, it is inadequate to develop the city's startup scene to match the level of Singapore, which has been ahead of us for 15 to 20 years,” said Truc. “However, this is where we lay the groundwork and systematically build a thriving startup ecosystem with an initial competitive edge.”

Among common policies being considered in the three cities is the permission for regulatory sandboxes, where small-scale testing of innovations can take place under regulators’ oversight.

The trio is also striving to provide various tax incentives for local startups, including exemption from capital gain taxes for investors in those firms.

In practice, foreign investors often favor investing in Vietnamese startups via entities situated in more developed financial markets as they tend to possess more predictable regulatory environments to secure their money.

This practice has pushed most Vietnamese startups to incorporate abroad in order to streamline their fundraising efforts.

“I'm not going to invest in any legal system that is not predictable,” said Ethan Mayers, US venture advisor, startup mentor and Swiss EP EIR.

“Vietnam could focus its policies more on creating a favorable business environment such as providing subsidiaries and tax benefits to make it easy for the money to be completely spent here, which is the outcome people actually want.”

As things stand, continuing to cultivate talent and enhancing the local business climate for innovation and entrepreneurship should be the key priorities for the country in its next stage of development.

The fundamental concept of Swiss EP activities and its Partner Summits revolves around creating meaningful connections, ultimately catalyzing successful collaborations to achieve such goals for Vietnam.