It's the right time for Hanoi to establish a venture capital fund, but its success will depend on transparency, strict oversight, diverse evaluation criteria, and comprehensive support for the startup ecosystem.

Experts shared this view at a consultative conference held on August 13 regarding the draft resolution of the Hanoi People’s Council on the organization and operation of the city’s venture capital fund.

A report from the Hanoi Department of Finance stated that as economies become increasingly dependent on knowledge and innovation, countries and localities with a sustainable development orientation are prioritizing the creation of ecosystems to support entrepreneurship, particularly innovation-driven startups.

Hanoi, one of Vietnam’s leading economic, political, and educational centers, is home to numerous research institutes, universities, startup support organizations, and a vibrant community of young entrepreneurs. However, one of the biggest obstacles for innovative startups is access to capital, especially early-stage venture funding. Private investors often hesitate because of high risks, limited information, and a lack of investment management tools.

On this basis, the department argued that it's essential to establish a state-backed venture capital fund in Hanoi, along with clear regulations on its organization and operations.

“The fund would provide strategic capital and non-financial support such as training, mentoring, and international networking, helping startups develop products, strengthen competitiveness, and contribute to double-digit economic growth while fostering an innovation ecosystem,” the agency asserted.

Under the proposal, the fund would be established through a business cooperation contract between the Hanoi People’s Committee and no more than six other investors. It would target high-tech enterprises, science and technology companies, and innovative startups in priority science and technology sectors.

Charter capital would come from the city budget and contributions from domestic or foreign investors, with the city’s share capped at 49%.

The fund’s functions would include equity investment, co-investment with other venture capital or startup funds, managing startup investment funds, and financing initiatives that support the innovation ecosystem.

Clear responsibilities of all parties involved

At the consultation, experts agreed that a venture capital fund is a new model for Vietnam as a whole, not just for Hanoi, and that establishing it is vital to achieving the capital’s science and technology development goals.

They also stressed the timeliness of the move, pointing out that public revenues remain limited while the need for capital in high-tech, green, and innovative enterprises continues to grow.

Associate Professor Dr. Bui Thi An, Vice Chairwoman of the Economic Advisory Council of the Vietnam Fatherland Front - Hanoi, recommended pairing financial investment with non-financial support and enforcing strict oversight when public funds are involved.

“At this time, issuing a resolution on the organization and operation of the venture capital fund is very necessary, but the fund will only be truly effective with transparent mechanisms, strict supervision, diverse evaluation criteria, and comprehensive policies to support the startup ecosystem,” she said.

It is essential to have a mechanism for monitoring state budget capital, clearly defining criteria, and ensuring transparency in project selection to prevent the fund from becoming a tool for vested interests, An continued.

Dr. Le Van Hoat, Vice Chairman of the Democracy and Legal Advisory Council of the Vietnam Fatherland Front - Hanoi, highlighted the need for clarity in defining the roles and responsibilities of all stakeholders, including the People’s Committee, the investors’ assembly, the fund’s management council, and the fund management organization.

Former Deputy Minister of Home Affairs Dr. Nguyen Tien Dinh suggested setting clear investment priorities for key science and technology sectors identified in the Law on the Capital.

“These include digital technology, information and communications, biotechnology, new materials, manufacturing and automation, environmental technology, carbon reduction, and climate change adaptation, along with other sectors defined by the People’s Council,” he said.

Some participants proposed a broader vision for the fund that goes beyond mobilizing capital for science and technology, aiming also to address the inherent “risk” of research and development activities. Others called for extending liability exemptions to funded enterprises and organizations in cases of investment losses, not just to the fund’s management bodies.

Nguyen Lan Huong, Chairwoman of the Vietnam Fatherland Front - Hanoi, said it will be the legal basis to implement the provisions of the Law on the Capital and the Politburo’s Resolution 57 on breakthroughs in science and technology, innovation, and national digital transformation.

Huong urged the Hanoi Department of Finance, as the drafting agency, to “fully and comprehensively incorporate feedback, ensuring the proposal is completed quickly and to the highest quality so that once approved by the People’s Council, the resolution will be effective and implemented in practice.”