New IPO rules in Vietnam: How startups can raise capital faster?

THE HANOI TIMES — Easing initial public offering (IPO) conditions for tech startups is a necessary step to develop Vietnam’s startup ecosystem and increase the number of future unicorns, according to experts.

This was discussed at a workshop titled "Leveraging Capital Markets for Vietnamese Tech Companies in the Digital Age" this week, which highlighted the many challenges facing the startup ecosystem, especially in raising capital through IPOs.

A more flexible financial and capital market system is essential for Vietnamese tech companies to thrive. Pham Thuy Chinh, Vice Chair of the National Assembly's Economic and Financial Committee, assured that the legislative body will continue to refine legal regulations to facilitate tech companies' access to capital markets.

Nguyen Ngoc Anh, General Director of SSI Asset Management, pointed out that only four startups in Vietnam, including VNG, MoMo, VNLife (VNPay), and Sky Mavis, are recognized as unicorns, a modest figure compared to the country’s potential. She suggested building a dedicated stock exchange for tech companies to help those without profits access capital more easily.

She added that Vietnam has the potential to become a leading destination for foreign investment in technology. However, foreign investors face challenges in identifying businesses to invest in due to IPO barriers and exit strategies. Listing conditions require companies to show two consecutive years of profits, which is a significant hurdle for tech startups.

"This is particularly challenging for tech startups, which often incur losses in their early stages due to high research and development costs," she noted.

Echoing Anh, Director of the Institute for Digital Economy Development Strategies (IDS) Tran Van said that many promising tech companies struggle to scale due to financing difficulties. He argued that the lack of exit channels through IPOs makes investors reluctant to enter the market.

“To ensure that Vietnam has at least five internationally recognized digital tech companies by 2030, it's crucial to have a robust financial system,” he stressed.

Easing IPO rules to encourage tech innovation

Tran Van of IDS suggested relaxing the requirements for technology companies to go public, which would help them mobilize funds without the pressure to make immediate profits. More flexible IPO requirements will enable Vietnamese technology startups to attract investment to expand, attract talent, and develop new technologies, contributing to GDP growth and creating high-quality jobs.

At the workshop, many delegates agreed that unlocking capital flows is crucial for the sustainable development of the startup ecosystem. Le Quoc Minh, Editor-in-Chief of Nhan Dan Newspaper and co-chair of the event, highlighted experiences from developed countries that show the crucial role of capital markets in supporting tech companies. The US, China, and Singapore have eased listing rules to support startups, and "Vietnam should learn from these successful models."

Meanwhile, Il-Dong Kwon, Executive Director of Boston Consulting Group Vietnam, stressed the importance of supportive policies for tech companies to raise capital, advocating for more flexible adjustments to improve funding efficiency.

Experts also discussed measures to make Vietnamese startups more attractive to venture capital and private equity funds, as well as how to improve IPO policies, enhance employee stock ownership plans, and even build a secondary market for startup shares.

Under Politburo Resolution No. 57, Vietnam aims to become one of the world's digital technology hubs with at least five digital technology companies of international stature by 2030.

Experts are positive about the prospects of tech startups in Vietnam. They said that with timely and appropriate policy adjustments, Vietnam can indeed become a digital technology hub with numerous unicorns in the future, fueling the development of its digital economy.