Startup businesses still thirsty for capital

The favourable business environment of Vietnam along with numerous incentive polices have offered optimal conditions for more and more enterprises to launch startups with their feasible ideals for new products.

However, the fact shows that many are still managing themselves to look for capital inflow, which is seen as a key factor behind their smooth operations.

Startup businesses still thirsty for capital

Nguyen Sac Phong, Project Director of the Green Farm Import Export Joint Stock Company in HCM City, says his company began operations in the field of organic agriculture in 2016 and since then its key products and services have been sold well in the domestic market.

Phong says initially he plans to expand this business model but failed on the back of capital shortage despite his best efforts to seek funding from multiple sources.

Vu Thien Hoang also faced the same situation when he came up with a business ideal for cosmetics and imported food. Hoang had to get along with capital mobilization from his friends and relatives and seek reputable suppliers during the startup process.

“If you do not have money in your hands, all ideas will get stuck,” he shares.

Actually, startup businesses usually only have in-depth knowledge about projects, products, areas of production and business but lack the skills to call for investment and basic knowledge about various related fields such as finance and administration.

In addition, many businesses are often impatient in persuading investment funds to lend them money and most banks set a series of rigid loan conditions that startups find difficult to meet.

Phan Dinh Tue, Deputy General Director of Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) says his bank is still in the process of building exclusive regulations for startup businesses.

According to some economic experts, the capital for startup businesses can still be found from banks and investment funds. The question is to have the knowledge and skills to call capital inflows from commercial banks and investment support funds.

There are many investors and private equity funds that startups can ask for help if their projects are proved to have great potential for development.

Ho Trong Lai from US financial advisory firm Waterstone Capital Partners LLC in Asia says if a start-up business wants to call for investment capital it is required to outline a specific project on personnel and capital using plans.

Many policies on streaming administrative procedures have been adopted, making it easier for businesses to embark on startups. The crux of the matter is how to ensure sufficient capital. It is now time for commercial banks to give a helping hand to startup businesses by setting appropriate lending criteria.

The Ministry of Planning and Investment (MPI) has set up the Startup Assistance Fund with a chartered capital of VND2,000 billion with a view to supporting startups but it is essential to define the right target and how much stakeholders will be involved in and how much will be provided by the fund.

Additionally, startups should stay more active in looking for investment funds or adventurous investors as the better way to help deal with capital shortage.