The boost from state venture capital funds

The venture capital fund model using the state budget needs to be operated flexibly, accepting risks as its name suggests.

Hanoi is promoting the establishment of a venture capital fund, thereby promoting innovation, science and technology development and the capital's startup ecosystem.

Precious "seed" capital

According to the draft project, the venture capital fund will be established with an initial charter capital of VND2,000 - 2,500 billion from the city budget (accounting for no more than 49%); operating under the "seed" capital model to attract more resources from private investors and domestic and foreign investment funds.

Unlike private funds operating for profit, the core objective of this fund is to provide strategic capital and non-financial support to help businesses start innovative businesses, develop science and technology products, and increase competitiveness.

With the "fund of funds" model, Hanoi's venture capital fund will invest in specialized funds - such as technology funds, healthcare funds,education funds, etc. - instead of investing directly in each enterprise, thereby reducing risks, increasing specialization and effectively mobilizing social resources.

It is noteworthy that the state plays a leading role in strategic orientation and does not intervene in specific investment activities.

In fact, some domestic venture capital funds such as IDG Ventures Vietnam, ThinkZone Ventures, VinVentures... have contributed to supporting startups, but because most of them are private funds, their main goal is profit. On the other hand, private funds can hardly cover the key areas that Hanoi wants to prioritize such as artificial intelligence (AI), semiconductors, biomedical technology, smart transportation, smart cities...

According to Mr. Le Hong Son, Permanent Vice Chairman of the Hanoi People's Committee, the city is lacking tools to fill the investment gap in high-risk areas where private funds are not ready to participate. The establishment of a venture capital fund is a necessary step to lead and activate social capital flows and unleash innovation resources.

For Ho Chi Minh City, allowing a pilot establishment of a venture capital fund using the state budget, according to the action plan to implement Resolution 57/2024 of the Politburo on breakthroughs in science and technology development, innovation and national digital transformation issued by the Ho Chi Minh City Party Committee, also brings expectations of good support for technology enterprises. A representative of the Ho Chi Minh City Department of Science and Technology said that the department is researching and building this fund model.

The establishment of a venture capital fund using the state budget is expected to help technology startups access capital more easily. Photo: LE TINH

Need a synchronous support ecosystem

Highly appreciating the initiative to establish a venture capital fund, many experts and investors proposed implementing additional accompanying policies such as exemption from capital transfer tax, personal income tax in reinvestment activities, having a recapitalization mechanism, secondary liquidity... These are policies that have been successfully applied in successful innovative startup countries such as Israel, Singapore, South Korea...

Mr. Bui Thanh Do, CEO of ThinkZone Ventures Fund, assessed that Hanoi's venture capital fund model is completely capable of creating momentum and attracting private investors - especially in the context that funds are considering transferring capital to localities with more attractive policies. The establishment of a venture capital fund not only has financial significance but also demonstrates innovative thinking in policy management, shifting from "giving - granting" to "leading and public - private cooperation".

According to Associate Professor, Dr. Nguyen Thuong Lang, lecturer at the National Economics University, the initial capital from the budget as "seed" capital will activate, attract and lead investment capital flows into science and technology and innovation.

"Policies for developing science and technology and innovation are not yet commensurate with expectations for this field. In the context of venture capital funds being quite rare, it is hoped that the fund established by Hanoi will focus on investing in projects with potential for breakthrough growth, creating positive social impacts" - Associate Professor Lang expressed.

Adding his opinion, Mr. Lang said that there should be a flexible fund management mechanism, in which the state plays a leading role in strategic orientation, inspection, supervision and must accept risks - as the name of the fund suggests.

Dr. Vo Hai Long, Deputy Director of the Hanoi Institute for Socio-Economic Development, also believes that the goal of the state venture capital fund is to provide capital and create an ecosystem for venture capital and startups. Therefore, he expects that this fund and its guiding documents will reflect the true spirit of "spot venture investment" and its effectiveness will be viewed from the perspective of positively impacting the startup ecosystem.

Regarding the venture capital fund using the Ho Chi Minh City budget, MSc. Pham Manh Cuong, founder of Wischain Company Limited, expects it to have a large enough capital scale, flexible operating mechanism and wide support scope for startups in many fields to access.

"Many venture capital funds are applying rather rigid selection criteria, making it impossible for many potential startups to access capital, especially new technology companies such as AI and blockchain..." - Mr. Cuong stated the reality. At the same time, he recommended transparency in selection criteria, appraisal and disbursement processes, and the use of technology to automate the steps.

According to Mr. Cuong, besides financial support, start-ups need a synchronous ecosystem, including favorable premises for testing and deploying products, and a clear legal corridor for new technologies...

"Without space for development and without being properly recognized in the market, it is difficult for startups to survive. In addition, venture capital funds need to connect with private investors and domestic and foreign organizations to form a network of investment communities, helping to increase capital scale and reduce risks," Mr. Cuong suggested.

First organization to join CoE project

The Ho Chi Minh City Department of Science and Technology recently announced that the Center for Nanostructured and Molecular Materials Research (INOMAR) under the Vietnam National University, Ho Chi Minh City is the first public science and technology organization approved to participate in the project to build a promotion mechanism to form and develop an international standard research center (CoE project).

At the same time, received a grant of 85 billion VND from the Ho Chi Minh City People's Committee to realize the goal of building an international standard research and innovation center in the field of advanced foam materials.

Source: https://nld.com.vn/suc-bat-tu-quy-dau-tu-mao-hiem-cua-nha-nuoc-196250715211259386.htm