Challenges in policy development

Despite efforts by the Vietnamese government to support small and medium-sized enterprises (SMEs), policies fostering a thriving startup ecosystem remain limited.

Technology and creative startups -known for their intellectual property, innovative business models, and rapid growth potential - have received attention, but more comprehensive incentives are needed.

While investment capital for Vietnamese startups has surged, especially in fintech, gaming, education, healthcare, and e-commerce, venture capital funding, tax incentives, and innovation training programs remain underdeveloped compared to neighbouring countries.

Startups also face persistent challenges in capital access, infrastructure, management expertise, branding, and administrative compliance.

Many early-stage ventures struggle to attract investors, particularly in the technology sector, where high upfront costs hinder research, product development, and commercialisation.

The term IPO (Initial Public Offering) has become increasingly familiar across Asia, particularly among technology startups. By listing on stock exchanges, companies can raise millions of USD and enhance their reputation.

Going public requires financial transparency and disclosure, strengthening trust with shareholders, customers, suppliers, and partners. IPOs provide startups with credibility and open new business opportunities, but the process remains rigorous and highly regulated.

Strict IPO regulations in Viet Nam

Vietnamese tech startup AirCity at the Asia Tech x Singapore (ATxSG) 2024. (Photo: VNA)

Viet Nam’s Securities Law No. 54/2019/QH14 establishes stringent requirements for companies seeking IPOs, including: transparent financial disclosure through multiple media platforms, including online sources; a minimum charter capital of 30 billion VND at the time of registration; and demonstrating profitability for two consecutive years before IPO registration with no accumulated losses.

Due to the complexity of IPOs, most companies hire professional consulting firms to navigate the process.

Strict regulations help improve IPO quality, protect investors’ rights, and ensure a healthy stock market. Tightening conditions prevent unqualified companies from listing and limits low-quality IPO surges, raising stock quality and reducing investor risks. These measures contribute to developing and perfecting Viet Nam’s stock market toward international standards.

Overcoming barriers for tech startups

Vietnamese technology startups often struggle to meet IPO requirements, particularly profitability conditions. Companies like VNG, Momo, VNPay, and Tiki have strong growth potential and could reach unicorn status with access to public markets.

However, early-stage tech firms often incur temporary losses due to high research and development (R&D) costs, making compliance with the profitability rule challenging. This discourages international investors and limits access to capital.

To foster innovation, Viet Nam should consider establishing a dedicated stock exchange for smaller startups, offering preferential conditions for domestic and foreign investors.

Until such a market exists, it is necessary to revise the Securities Law to allow tech startups with accumulated losses - but strong growth potential - to list for professional investors, venture capitalists, and global investors.

A more adaptive regulatory framework for IPO would empower technology startups to expand, innovate, and contribute significantly to Viet Nam’s economy.