After a long period of debating whether spending over VND1 trillion (US$45 million) to encourage startups is a sound investment, Ho Chi Minh City authorities recently decided to greenlight the funds.
VietNamNet reports that the benefits of investing in local startups will be tremendous, even if only 10-20% of them end up running well and making profits. The startups will create a considerable source of revenue for HCMC, while also potentially becoming the backbone of the national economy. The city expects to have about 500,000 startups by 2020, according to the news source.
In their quest to build a startup hub, HCMC authorities have also approved the creation of Saigon Silicon City inside District 9's Saigon High-Tech Park to attract more companies and investors. This new project alone aims to attract US$1.5 billion in investments.
The startup culture in HCMC is currently thriving. HCMC-based designer Jon Myers shared with Virgin News that some of his peers have even quit their jobs at Apple to move to the metropolis and establish a startup after reading about his experiences in hiring local talent.
However, in a post on LinkedIn, an entrepreneur named Eytan Schmal cautioned that there are risks associated with Silicon City, as it could end up becoming nothing more than a testing and integration lab for large foreign corporations, who are unlikely to move their core development activities offshore.
In addition, Vietnam lacks an ecosystem that can foster the growth and development of startups. This includes networks, mentors, incubation and acceleration programs, global exposure, investments, tax deductions and so on. The country founded Vietnam Silicon Valley in 2013 in an effort to address these shortcomings.
This will take time, but many of the right ingredients are in place. An article from phys.org quotes Eddie Thai of 500 Startups explaining that "the local market [itself] is large, young, fast-growing and not fully tapped". 500 Startups is a venture fund with US$10 million in assets.
Labor-wise, the pool of talent in HCMC is promising though: Vietnam has an increasingly well-educated workforce, which is also cheaper in comparison to China and Singapore.
