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Need a good “midwife” for start-up ideas

There have been successful start-ups in Vietnam. However, for a new wave of innovation, creation and start-up spirit wide spread, there should be a practical and efficient start-up ecosystem.

START UP

Start-up is the process of realizing a business idea, based on a creation or an application of research results, technical solutions, technology, and management solutions to improve productivity and quality, and added value of products and goods with rapid growth. Thus, the essence of start-ups is a model of passion, creativity, unlike starting a business, which is building a business by setting up a private business or an individual business.

Starting a business is a big issue that is being paid great attention by the Government, departments, sectors and localities today. Vietnam currently has about 3,000 innovative businesses, according to a survey by a Singapore-based magazine. Among them, there are some typical start-ups: most of them are young people, who have been awarded the Vietnamese Talent Award or been honored in the Top Start-ups list in recent years.

Besides, there are currently more than 40 investment funds with venture capital activities in Vietnam- most of them from abroad. Last year, Vietnam attracted 29 investment deals with a total announced amount of USD 751 million. The biggest deal in the financial technology sector, worth up to USD 300 million, ranked first among investments in financial technology companies in Southeast Asia. The amount of capital poured into companies based in Vietnam accounts for 18% of the total value of capital calls for the entire region, up sharply from 4% (USD 287 m) in the previous year. According to forecasts, if this trend continues to develop, Vietnam will have many start-ups valued at between 500 million and 1 billion USD in the near future.

However, behind the massive implementation of start-up stimulus movements, many entrepreneurs still face many difficulties. They often lack information about investment sources, about organizations and programs that support their developments, especially information about the Government’s support policies. They also lack equity capital and

face difficulties in accessing preferential credit sources to implement their business projects, as well as in demonstrating their development potentials to attract venture capitals from funds and investors. In fact, startups often have to “self-reliant” a lot in financial matters and often dismantle projects in the middle due to lack of capital or lack of a deep understanding of an effective business model.

START-UP ECOSYSTEMS

There has no complete definition of the start- up ecosystem so far and the term has been used in different ways. In general, the concept denotes a community of symbiotic who help one another to create a favorable environment that fosters creation of innovative and fast-growing start-ups. Start- ups ecosystem is a collection of start-ups playing a central leading role and other related sides playing supporting role with organic relationships, coexisting and developing together.

For the startup ecosystem to really become a “midwife” for entrepreneurs, it is necessary to have synchronous developments to all the above factors and components in the whole stimulating and oriented context serving start-up ideas and projects.

As such, the main members of the start-up ecosystem are start-ups. Other members that are considered part of the ecosystem include foundations and investors, donor organizations, capital donors, large enterprises, universities, research institutes, and “incubators”, accelerators and other service providers (both public and private), as well as processes, events and other entities (such as meetings exchanges, competitions).

Based on the above definitions, it can be seen that the start-up ecosystem will include different factors depending on economic, political, educational conditions,... of each locality. Essentially, the elements that make up a start-up ecosystem can be generalized, as defined by the World Economic Forum as follows: (1) Market; (2) Human resources; (3) Capital and finance; (4) Start-up support system (instructors, consultants ...); (5) Legal framework and infrastructure; (6) Education and training; (7) Universities and academies; (8) National culture; (9) Companies or resources supporting IT.

With such a wide range of constituents and such diverse participants, a start-up ecosystem is a complex entity. For the start-up ecosystem to really become a “midwife” for entrepreneurs, it is necessary to have synchronous developments to all the above factors and components in the whole stimulating and oriented context serving start-up ideas and projects.

Universities play an important role in start- up ecosystems by providing students with entrepreneurship, new ideas and enhancing the intellectual capacity of the community, organizing activities and start-up groups. It is equally important to have presence effective service providers as lawyers, accountants, recruitment agencies and business advisors. They understand the needs of start-ups and are able to help them avoid difficult circumstances or non-focused out sourcing. Involvement of experienced entrepreneurs who contribute time, energy and intelligence to support the ecosystem, notably venture capitalists, start-up advisors, start-ups and leading organizations to support entrepreneurs, is the main cause of success of a start-up ecosystem.

It should be noted that the formation of start- up ecosystems depends largely on the development of new technology markets, on emergence of new opportunities in how to exploit technology and market opportunities. In that context, “incubator” organizations also play an equally important role in motivating future entrepreneurs, helping them acquire technical skills and knowledge about products and markets, and acquire opportunities to develop understanding of appropriate organizational structures, strategies and systems.

All of these factors can only develop in a good dynamic legal and institutional environment. Improvements of legal framework from the central government, timely solutions from local authorities- derived from concerns to the needs of entrepreneurs- will have an effect of leading process and be a bridge for different factors to coordinate “in harmony” for an effective start up ecosystem...

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