Promoting Vietnam's innovative startup ecosystem

The Government has just issued Decree No. 264/2025/ND-CP regulating the National Venture Capital Fund and local venture capital funds. This is considered a breakthrough step to promote the Vietnamese innovative startup ecosystem, creating financial resources for technology enterprises, startups and innovation projects.

Need a boost for innovation

In the context of the Fourth Industrial Revolution and the boom of the digital economy , Vietnam is striving to build a strong innovative startup ecosystem to promote sustainable economic growth and international integration.

In recent years, Vietnam has been considered one of the most dynamic destinations in Southeast Asia for technology startups. However, many potential ideas still lack venture capital, especially in the early stages, when businesses do not have revenue, guaranteed assets, or a clear operating history. Meanwhile, private capital sources are limited due to the high level of risk, making government support policies urgent.

Decree 264/2025/ND-CP was issued to solve this "bottleneck", creating a legal corridor to form a National Venture Capital Fund and encourage localities to set up their own investment funds, thereby promoting capital flows for innovation.

The Decree provides detailed guidance on the contents stipulated in the Law on Science , Technology and Innovation (Article 40), realizing the policies and orientations in Resolution No. 57-NQ/TW, aiming to unblock venture capital sources from the public sector, promote capital transactions through the establishment and operation of national venture capital funds, local venture capital funds, and Stock Exchanges for innovative startups. On that basis, attract venture capital sources from the private sector, promote and develop the venture capital market in Vietnam, promote capital transactions, and contribute to the development of the national innovative startup ecosystem.

Vietnamese technology startups are growing rapidly and in need of large capital.

Previously, venture capital activities in Vietnam mainly relied on private or foreign funds, leading to a lack of uniformity and high risks for domestic startups. This Decree was issued as a comprehensive solution, not only providing capital from the state budget but also encouraging the participation of domestic and foreign organizations and individuals. This reflects the marketization principle in economic management, where the State plays a leading role but does not deeply intervene in business activities, ensuring publicity, transparency and efficiency. In this way, the Decree not only supports the startup ecosystem but also contributes to the implementation of the Socio-Economic Development Strategy 2021-2030, towards the goal of Vietnam becoming a high-income country by 2045.

"Midwife" for bold ideas

One of the core policies of the Decree is the regulation on the Fund's operating principles, which is clearly stated to ensure feasibility and sustainability. According to the Decree, the National Venture Capital Fund (abbreviated as the National Fund) is a non-budgetary state financial institution, operating not for profit, with the functions of investing, contributing capital, co-investing and supporting innovative start-up enterprises.

The Fund must comply with Vietnamese law and international treaties, and respect foreign laws when investing internationally. This not only protects national interests but also creates confidence for foreign investors, promoting international capital flows into Vietnam. Moreover, the principle of operating under market mechanisms, accepting controlled risks, emphasizing publicity, transparency and information security, is a step forward compared to traditional management models. In particular, the Fund is required to prioritize investment in businesses and innovative start-up projects with high growth potential in the fields of high technology, digital technology , green economy and circular economy, in order to create positive impacts on the economy, society and environment. This demonstrates the Government's strategic vision and awareness that venture investment is not only for profit but also a tool to solve global challenges such as climate change and social inequality. In the context that Vietnam is facing pressure to transform digitally, this policy will promote the birth of Vietnamese technology unicorns, similar to the way venture capital funds have made success in Silicon Valley.

Next, the Decree clarifies the legal status of the Fund, affirming its independence and professionalism in operation. The National Fund is established in the form of a limited liability company with two or more members or a joint stock company, according to the Enterprise Law; Local Funds are established and operate in the form of enterprises according to the provisions of the Enterprise Law. Both have legal status, their own seals and the right to open accounts at the State Treasury as well as domestic and foreign banks. This policy not only ensures flexibility in management but also encourages the diversification of organizational forms, suitable to local conditions.

Regarding the organizational structure and powers, the Decree clearly stipulates the organizational structure and powers of the Fund as stipulated in the Fund Charter (Company Charter) according to the provisions of the Enterprise Law; the rights, responsibilities, salaries, remuneration, bonuses and other benefits of the representative of the State capital portion at the Fund are implemented according to the provisions of the law on management and investment of State capital in enterprises. The Ministry of Science and Technology is the agency representing the State capital portion at the National Venture Capital Fund, responsible for appointing a representative of the State capital portion at the Fund. The Provincial People's Committee is the agency representing the State capital portion at the local venture capital fund, responsible for appointing a representative of the State capital portion at the Fund. The Fund is allowed to cooperate with and hire domestic and foreign professional organizations and individuals to manage and operate the Fund's activities according to the provisions of the Fund Charter. The Fund is allowed to establish advisory councils and investment appraisal councils to support the Fund's investment activities.

Regarding the Fund's objectives, functions and tasks: The Fund's objectives are to invest and attract investment resources into innovative start-up enterprises and innovative start-up projects with breakthrough growth potential, capable of solving economic, social and environmental challenges at the local, national and international levels; support and promote the development of the national and local innovative start-up ecosystem and the venture capital market in Vietnam to serve the country's socio-economic development and international integration.

Functions and tasks of the National Venture Capital Fund: Contribute capital to establish, purchase shares, purchase capital contributions in domestic and foreign innovative start-up enterprises; contribute capital to co-invest with other domestic and foreign venture capital funds and innovative start-up investment funds to establish, purchase shares, purchase capital contributions in innovative start-up enterprises; establish and contribute capital to other domestic and foreign venture capital funds and innovative start-up investment funds to carry out venture investment and support the national innovative start-up ecosystem.

Functions and tasks of local venture capital funds: Contribute capital to establish, purchase shares, and purchase capital contributions in domestic innovative start-up enterprises; contribute capital to co-invest with other domestic venture capital funds and innovative start-up investment funds to establish, purchase shares, and purchase capital contributions in innovative start-up enterprises and support the local innovative start-up ecosystem.

Regarding capital sources, the Decree stipulates that for the National Investment Fund, the Fund's charter capital includes: State capital allocated from the Ministry of Science and Technology's development investment expenditure estimate, provided once upon the Fund's establishment, with the initial capital allocated from the state budget being at least VND 500 billion; Capital contributions from domestic and foreign organizations and individuals (if any) are implemented in accordance with the provisions of law and the Fund's Charter; The charter capital scale of the National Venture Investment Fund established in the first 5 years must reach at least VND 2,000 billion, on the basis of state capital allocated from the state budget and capital mobilized from organizations and individuals.

A notable new point is Decree 264 allowing provinces and centrally-run cities to establish local venture capital funds. This is a decentralized model, helping each locality proactively support the local innovation ecosystem.

For local funds, the fund's charter capital includes: The state capital is provided from the local development investment expenditure estimate, provided once from the fund's establishment, with the initial capital proportion provided from the state budget decided by the provincial People's Committee; The capital contribution from domestic and foreign organizations and individuals (if any) is implemented in accordance with the provisions of law and the Fund's Charter.

The Fund's revenue sources include: Profits from investment activities according to the Fund Charter; interest on bank deposits for temporarily idle capital between investment cycles, including the Fund's charter capital and mobilized capital; grants, aids, and legal voluntary contributions from domestic and foreign organizations and individuals; revenue from divestment and liquidation of the Fund's assets and other legal revenues according to the provisions of law and the Fund Charter.

The Fund's operating expenses include: Management, operation and other activities directly serving the fund's operations; expenses to support the development of the national and local innovative startup ecosystem with a maximum of 5% of the fund's annual after-tax profit; expenses to set up a venture capital risk reserve fund from the fund's annual operating capital, including charter capital and mobilized capital, according to the Fund's Charter and other legal expenses according to the law and the Fund's Charter.

Sky Mavis, a billion-dollar startup in Vietnam, is one of Vietnam's technology unicorns.

Investment expenses of the Fund include: Expenses for contributing capital to establish innovative start-up enterprises; expenses for purchasing shares and capital contributions at innovative start-up enterprises; expenses for contributing capital to venture capital funds or other innovative start-up investment funds as prescribed by law.

With Decree No. 264/2025/ND-CP, the State plays a role in creating and accompanying the private sector to promote innovation. When national and local funds come into operation, each valuable startup idea will have the opportunity to take flight, creating new growth resources for the economy. This is also a specific solution to implement the Strategy for Science, Technology and Innovation Development to 2035, with a vision to 2045, contributing to making Vietnam an innovative country in the region and the world.

Center for Science and Technology Communication

Source: https://mst.gov.vn/thuc-day-he-sinh-thai-khoi-nghiep-sang-tao-viet-nam-197251020161530195.htm