Vietnamese start-ups receive a $250-mln boost last year

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Total venture capital investments into Vietnamese start-ups soared 78 percent to about $240 million last year, an official from start-up accelerator program Topica Founder Institute said Friday.

The Southeast Asian country has an ambitious plan to transform itself from an offshore manufacturing hub for foreign companies into a major player in the global digital economy.

The government has started adjusting business policies to pivot around small and medium-sized companies and encouraged a start-up bloom.

Vietnam launched a project last year to support fledging local companies, under which the government will help fund about 2,000 start-ups by 2025.

Topica Founder Institute statistics showed that as many as 60 percent of investment deals that Vietnamese start-ups managed to seal last year came from venture capitalists.

Meanwhile mergers and acquisitions accounted for 30 percent of start-ups' funding and the remaining were financed by private equity firms.

Just six years ago, Vietnam recorded only 10 start-up investments. The number of successful deals increased seven-fold to 67 deals in 2015, according to Topica Founder Institute.

Among the most notable investments was South Korea’s UTC Investment’s $38-million acquisition of a controlling stake in VNPT EPay, marking the biggest deal last year, the program said.

Momo, a local payments and online wallet company, has raised an unprecedented $28 million from Standard Chartered and Goldman Sachs.

A lack of funding to help start-ups get their idea off the ground is their most concern, startup experts have said. 

Some argued that institutions like the stock market or commercial banks are either not designed to financially support idea-stage companies or have insufficient resources to do so.

Although there are banks that focus on small and medium-sized companies, they really are not able to offer financing to early-stage companies which often don’t have a track record of reliable annual revenues or a history of good credit.

Hence start-ups are more likely to seek funds from other resources like venture capital investors and private equity firms.

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