The Hanoitimes - In addition to ideas, business model, start-ups will need other decisive factors such as personnel, strategy and capital.
At present, the business environment of Vietnam is quite favorable, with the presences of policies supporting enterprises, which are prerequisites for enterprises to successfully start-up. Previously, ideas on new products and business models are key for successfully start ups. However, in the current situation, start-ups need other decisive factors, such as personnel, strategy and capital. In reality, the factor of capital is the most important as the majority of start-ups are still lacking capital.
Nguyen Sac Phong, Project Director of Green Farm Investment & Export JSC in Ho Chi Minh city said, the company started business in green agriculture since October 2016. As of present, some products and services in small scale of the company has received positive responses from the market. However, as the company is expanding its operation, Phong has looked for capital from various sources, but failed to find suitable sources. With this being said, his ideas of developing business in green agriculture may not materialize in case of lacking capital. Similarly, Vu Thien Hoang started –up with the idea of developing business in cosmetics and imported food & beverage products. However, he also could not find suitable capital. Hoang currently maintained his small scale business with the fund of tens of million VND from friends and family. With the net profit from its business, only when he can add up to establish an enterprise and find credible suppliers, then he can be a successful start-up. With Hoang, capital becomes vital factor. “Capital is the most difficult challenge when start-up. Without capital, every ideas will fail to materialize. I can still mobilize fund from friends and family, but it is very small so I can only go for projects requiring small fund and with clear objective to use the fund” – Hoang said.
In reality, start – ups often have advantages of deep expertise on projects, products, business fields, but lack experience on calling investment and related skills with regard to finance and management. Moreover, enterprises often give up when they fail to convince investors for the first time, or second time. While commercial banks always request conditions for giving loan, which are difficult for start-ups to meet. Vice General Director of the Sacombank Phan Dinh Tue said, as of present, the bank is still developing its own mechanism and products to support start-ups. According to some experts, loan for start-ups can still be available from banks and private equity. The problem is start-ups should have sufficient knowledge and skills to call for investment from commercial banks, private equity and supporting fund. There are numerous investors and private equity willing to support start-ups, some organizations have shown interest to invest in high potential projects with high chances of success.
Director of the Waterstone Capital Partners LLC (US) in Asia region Ho Trong Lai said, start ups want to call for investment must have a convincing proposal with specific request for capital, which shows the well preparation on personnel, plan for using funds along with determination.
As such, at present, there are favorable mechanism policies and administrative procedures for start-ups. The remaining issue is capital, therefore, it is necessary for commercial banks to set aside funds to support enterprises with suitable conditions for loan. The supporting fund for start-ups established by the Ministry of Planning & Investment with the capital of 2 trillion VND should focus on the right target, in which it should be clear how many percentages the company owner will contribute and how many is coming from the fund.
Enterprises should also be active in looking for private equity, and investors, so that they can solve the problem of lacking fund.