Saigon, chasing the Silicon Valley dream, nurtures tech startups

Vietnam has set an ambitious goal of turning Ho Chi Minh City into a major tech hub, with outstanding companies that can compete in the global economy.

The startup ecosystem of the city, though nascent, is so vibrant that it has even managed to get the local government involved in creating and running incubators to support early-stage startups, a field that traditionally belongs to private companies.

As part of its broader plan to bolster the private sector, the city wants to build its own Silicon Valley, a symbol of tech breakthroughs.

U.S. President Barack Obama talks with a worker during a tour of the Dreamplex co-working space in Ho Chi Minh City. Photo by Reuters/Carlos Barria

The city's Silicon Valley is envisioned as a strong support network of services and programs that help fledgling startups get their ideas off the ground.

Policymakers have recently approved a package of fresh initiatives aimed at paving the way for a tech boom.

Under the plan, the government will support 2,000 idea-stage companies over the next four years through training, networking, legal consulting, and funding.

SHTP iHub, a newly-launched startup incubation center, is among a few state-run incubators in the city.

“With the support from the city government, now we fund each startup with an amount between VND50 million and VND100 million ($2,000-$4,000),” said manager Le Thanh Nguyen.

Nguyen said that the selected companies will receive the financial support through services such as consulting, product testing and completion, and marketing.

He added that the city’s policymakers have approved the construction of a high-rise startup incubation center which is expected to open next year.

Vietnam has seen startup successes like Flappy Bird as an encouraging sign. The government is trying hard to cultivate a startup scene in which techies can re-create such a runaway success.

What differs state-run incubators from privately owned centers is that making profit is not the goal, said Nguyen.

He described his incubator as the heart of the city’s startup ecosystem that provides access to information, mentoring and working space at a small fee.

“We want to turn this place into a place where you meet your angel investors,” Nguyen continued.

SHTP iHub has teamed up with Vietnam Silicon Valley, a project run by the Ministry of Science and Technology with a $3 billion fund, to launch a program giving startups in the city a boost.

It has also reached a deal with Dragon Capital, a venture capital fund, for monthly training and mentoring for entrepreneurs.

Another notable player, Saigon Innovation Hub, or SIHUB, was set up by the city’s science and technology department.

“SIHUB generally has no intention of doing what other incubators have done so far. We only focus on jobs which require state resources,” said Huynh Kim Phuc, director the Center of Energy Saving, the operator of the incubator.

He added that as the government provides the support including funding, it will have full control over where the money goes. Through this process, it can give priority to startups engaged in the city’s most critical industries and sectors.

Ho Chi Minh City’s authorities hope that the private sector will eventually contribute about 65 percent to the city’s gross domestic product.

The city has decided to allocate 70 percent of a VND3-trillion fund set up to boost the private sector to help companies switch to high-tech equipment and apply new technologies. The annual target is to get 30-35 percent of local businesses using innovative solutions.