National and local venture capital funds: Institutional breakthroughs to promote innovative startups in Vietnam

The Government has just issued Decree No. 264/2025/ND-CP regulating the National Venture Capital Fund and Local Venture Capital Funds. This is the first time Vietnam has a complete legal framework for venture capital activities, a key driving force of the innovative startup ecosystem, opening up a new direction in mobilizing social resources for innovation and sustainable development.

National venture capital funds and local venture capital funds are established to invest and attract social resources into innovative start-ups and projects with breakthrough growth potential, while addressing economic , social and environmental challenges at the national and local levels.

This is a step to realize Article 40 of the Law on Science , Technology and Innovation, demonstrating the Government's determination to make venture investment an important component of the creative economy. The Decree also clearly stipulates the organization, management, capital structure, operating principles and monitoring mechanisms, ensuring publicity, transparency and compliance with international practices.

According to Decree 264, venture investment is the activity of contributing capital to establish, purchasing shares, capital contributions in innovative start-up enterprises or investing in venture capital funds, other innovative start-up investment funds at home and abroad.

Funds operate on the principle of a controlled risk-taking market that ensures efficiency, transparency and information security. In particular, the Decree emphasizes the requirement that funds prioritize investments in high technology, digital technology , strategic technology, green economy, circular economy, sustainable development, contributing to promoting the knowledge economy and green growth.

In the context of strong globalization and digital transformation, venture capital is not only a financial capital, but also a capital of knowledge, experience and international networks to help Vietnamese startups reach out to the world. Institutionalizing the operating mechanism of these funds will help Vietnam attract more domestic and foreign strategic investors, while reducing risks for the private sector when investing in early-stage startup projects.

Decree No. 264/2025/ND-CP promotes the development of Vietnamese innovative startups.

Regarding legal status, the National Venture Capital Fund is established and operates as a limited liability company with two or more members or a joint stock company, has legal status, its own seal, and is allowed to open accounts at the State Treasury as well as domestic and foreign banks.

Local venture capital funds are established and operate in the form of enterprises under the provisions of the Law on Enterprises, under the chairmanship and direct management of the Provincial People's Committee.

The organizational structure, powers, salaries, remuneration and benefits of the representative of the State capital portion at the fund shall be implemented in accordance with the provisions of law on State capital management at enterprises. The Ministry of Science and Technology is the agency representing the State capital portion at the National Venture Capital Fund, responsible for appointing the State capital representative and supervising the fund's operations.

Funds are allowed to hire domestic and foreign professional organizations and individuals to manage and operate in order to improve professionalism and efficiency in investment. At the same time, advisory boards and investment appraisal boards are established to support decision-making, ensuring the objectivity and efficiency of each investment deal.

The fund's revenue sources include: profits from investment activities, interest on temporarily idle deposits, aid, legal contributions and revenue from divestment and asset liquidation.

Notably, the Fund is allowed to allocate up to 5% of its annual after-tax profit to support the development of the national and local innovative startup ecosystem, demonstrating the orientation of "using investment to nurture innovation" - a principle of sustainable development.

The fund's investment expenditures are focused on: contributing capital to establish innovative start-up enterprises; purchasing shares and capital contributions; and contributing capital to other innovative start-up investment funds.

Along with that, the fund can support consulting, training, connecting investors and businesses, forming a national startup network connecting the central, local, businesses, research institutes, and investors.

According to experts, the establishment of national and local venture capital funds will help reduce institutional gaps in investment activities for innovative startups, especially in the early stages when there are high risks but great potential.

This is also a necessary step to form a professional venture capital market in Vietnam, creating a safe environment for investors, while encouraging the private sector to participate more strongly in innovation.

In the context of Vietnam aiming to become a high-income country based on knowledge, innovation and technology, the Government's issuance of Decree 264/2025/ND-CP is of particular importance.

Not only creating a legal corridor for venture investment activities, the Decree also affirms the role of the State in "activating" social resources, taking the private sector and innovative enterprises as the center of development.

When national and local venture capital funds come into operation, the Vietnamese startup ecosystem will have an important "institutional launch pad" where public and private capital flows connect, risks are shared, and creative ideas are nurtured into products and businesses of international stature.

With Decree 264/2025/ND-CP, the Government has laid the first institutional foundation for Vietnam's venture capital market, linking national policies, local potential and the entrepreneurial spirit of people and businesses.

This is the model that many developed countries have successfully applied: State initiated, private sector accompanies, and market led.

In the coming time, along with the completion of the policy system on tax, intellectual property, and commercialization of research results, the National and Local Venture Capital Funds will become an important resource for Vietnam to create an innovative economy, keep up with global trends and affirm its position on the world startup map.

Center for Science and Technology Communication

Source: https://mst.gov.vn/quy-dau-tu-mao-hiem-quoc-gia-va-dia-phuong-buoc-dot-pha-the-che-thuc-day-khoi-nghiep-sang-tao-viet-nam-197251016104458096.htm