Vietnam’s angels: small money, big impact

It’s really hard to launch and grow a startup with no money, which is why seed capital is every entrepreneur’s (second) dream, the first being their business.

But seed capital is hard to come by because of the level of risk investors have to be comfortable with to invest. Often times, seed capital is an investment in the dream and the team behind it alone because at this stage of a startup’s journey, financials are typically non-existent, customers are a maybe, traction is just starting, and what investors are paying for is experimentation and finding product-market fit. This is why this kind of capital is so critical to allow ideas and innovation to become a reality and for a thriving entrepreneurial ecosystem.

Vietnam, like many other entrepreneurship hubs, has decent venture capital investment, but little to no money flowing into early stage startups, which holds the ecosystem back as a whole.

We saw this as an opportunity. First, we believed the problem was education: potential investors needed training on how to actually make an investment. So, with ecosystem-builder and Swiss EP-partner, ICM, leading the charge, we launched an investor training program. Attendance was high, but after the pitches, potential investors walked away with know-how but zero investments. The bar needed to be raised.

Thus, Angel City was born. Angel City is a 3-month investment training program where potential investors put up $4,000 for a seat at the table. Dozens of startups apply and ICM filters them down to the top five startups, who pitch to investors. Experienced investors help new investors ask the right questions, do the necessary due diligence, all the way up to choosing which startups the group will invest in. Each investor receives one vote and together they choose who to fund.

The first Angel City program provided two early-stage startups with $20,000 in funding, lowering the investment bar (and psychological hurdle) new investors face and helping them get into the habit of putting their dollars to work. In short, Angel City made it easier for investors to actually invest by decreasing the risk, facilitating the process, and creating a network of investors who can continue to pool their money.

When more people join the investment community even with small amounts of money, previously un-funded business get seed stage funding. This is a win for the startups, a win for the investors, and a win for the growing ecosystem. While this program is still in the pilot stage, other ecosystem-builders from around Vietnam are starting to replicate it. And although there are still challenges to overcome, we believe that making this program work around Vietnam will help the ecosystem thrive. Angel City is our mission in action.