The Vietnam Ministry of Planning and Investment is planning to introduce an official crowdfunding policy for Vietnam, DEALSTREETASIA has learnt. In fact, the ministry is already in the process of taking feedback from the local startups before the policy framework is finalised.
While several venture capital firms and angel investors have been active in the country, like Cyberagent Ventures, 500 Startups and Inspire Ventures, crowdfunding is a relatively new concept for the country.
“The method is quite new in the market here, but the local entrepreneurship community has some perception of the concept and so it is not completely unfamiliar,” said Cao Quy Vu Anh, founder of crowdfunding platform Fundstart.vn.
According to Vu Anh, Vietnam’s startup ecosystem has a market gap as far as seed funding goes. This places the Vietnamese startups at a risk of failure as the founders are unable to execute their ideas mostly due to the lack of funding. “That is why Fundstart.vn was launched. Firstly to bring innovative ideas to the market and secondly to help extend the support of the Vietnamese community to the local startups,” he said.
Several pioneers in the local startup community have been proactive in approaching the government, urging it to build better policies for startups in general. “One thing I have seen is that the government is paying more attention to startups,” he added.
Startups tend to introduce disruptive ideas. With appropriate policy adjustments, the efficiency and economic contribution of startups will become apparent. “Potentially, a lot of ideas can go global. With such a promising future, crowdfunding, as well as other new models of fund raising – the market has access to better opportunities than ever before,” Vu Anh noted.
With challenges come opportunities
The biggest challenge for startups that want to raise money through crowdfunding, is to build trust among the supporters.
It will not be easy to raise money from someone who only knows about startup projects through the internet and barely understands if they can succeed. People will help startups with their money, if the teams are able to show attractive points of their projects and the benefits they will generate to the community.
However, according to Vu Anh, the most important thing above all else is the feasibility of the projects .“For Vietnamese startups, I believe once they have ideas and enthusiasm, they will not be afraid of confronting the challenges,” he commented.
Crowdfunding is not just source of raising funds from the larger community, it also helps to test if the new project is well perceived. Securing investment through crowdfunding is much easier than other methods and startups will have financial resources for their early-stage development without giving a part of equity to investors.
At Fundstart, startups will receive advisory and media coverage support to be able to highly succeed in calling for funding from the community.
Vietnam’s first crowdfunding platform was IG9, incepted in 2013. It is founded by Do Hoai Nam, co-founder and CEO of US-based augmented television developer Seespace, also acted as a connector between startups and government officials, recently.
Besides IG9 and Fundstart, there are several crowdfunding websites. However, the activities are nascent.
Meanwhile, some Vietnamese and Vietnam-based startups have raised funds through overseas platform IndieGoGo, including the Misfit Wearables (raising $800,000 compared to the expected money of $100,000) and soundmap platform Echoes (103 per cent funded).
If Vietnam launches its crowdfunding framework soon, it will become the second country in the ASEAN to do so, following Malaysia, which last month passed the amendments in the Capital Markets and Services Bill 2015 to regulate crowdfunding activities.