Startup Generation: Ideas Must Be Dedicated to Majority of Society

1:53:12 PM | 10/10/2019

Vietnam now has a new generation of young, dynamic, vibrant startup businesses that are determined to realize their passions with high business confidence. However, in order to be successful, they need to equip themselves with adequate business knowledge, market knowledge, business management model and personal entrepreneurial will among other factors in addition to a professional and healthy startup environment.

Strong startup ecosystem

According to the General Statistics Office (GSO), Vietnam had 90,500 new companies with a total registered capital of VND1,150.7 trillion (US$50 billion) in the first eight months of 2019, up 3.5% in corporate entities and 31% in value over the same period in 2018. Besides, 25,500 suspended companies resumed operations, 21.8% more than a year ago, bringing total new active companies to nearly 116,000 in the first eight months of 2019.

According to Singapore-based Echelon Magazine, one of the largest online magazines on startups in Southeast Asia, Vietnam currently has about 3,000 innovative startups, nearly double the estimate made in late 2015. Over the past two years, Vietnam has received dozens of innovative startup investment deals, including high-profile, impactful deals like Topica, WeFit and Luxstay.

Vietnam has made initial success in developing startup entrepreneurs and has established a young, vibrant and enterprising startup generation. In addition to advantages of technology boom and open thinking and approach to management, this startup generation also has market advantages when Vietnam is more open to the world on account of a series of free trade agreements with partners from Asia to Europe. On the other hand, they also have many opportunities with the boom of internet and smartphones, leading to the robust growth of e-commerce. All young entrepreneurs can find opportunities to make their ideas come true. In fact, many successful startups such as, Haravan and Fibo have made Vietnam a bright spot for Asian technology startup movement.

Common mistakes of Vietnamese startups

Recent figures and reports all show that Vietnam's startup market is entering a “peak” stage, but the actual implementation is facing certain obstacles. CB Insight, which builds software that predicts the next technology trend, said that startup failures in the world generally range from 75% to 90%.

There are many reasons for failures. According to Mr. Dinh Anh Huan, founder of Seedcom, a company that invests heavily in Vietnamese startups, there are two underlying reasons: Inexperienced founders and limited access to funds. While the startup movement flourishes, founders in Vietnam are proven to lack necessary skills. They mostly lack business insights and lack true experience with products and they thus overestimate their capabilities.

The second matter is funding. The development of the Vietnamese market has largely resulted from the real estate market, the financial market, and the resource market. Entrepreneurs successful in these markets often have very different views on business startup and they hardly invest in a ‘potential, idea-based business” that is excessively overvalued to them.

Mr. Nguyen Manh Thang, Chief Technology Officer of Luxstay, pointed out that the common mistake for most startups is solving too many problems at the same time and there are no specific directions for each stage of development.

“The toughest time for a startup is the first 1-2 years because this time witnesses most changes in its products. Only if the startup meets market demand, and can raise funds, will its chance of success be higher and its path to unicorn easier,” he added.

Sharing this point of view, Mr. Nguyen Thanh Viet, President and CEO of Intracom Group, said that although younger generations today have more enterprising ideas than previous ones, they lack the sense and certainty of planning for development path to achieve optimal performance and success. As an investor in the televised Shark Tank Vietnam, he also pointed out three big fundraising mistakes that startups are currently facing: First, using so much English terminology and abusing technology terminology; second, having unrealistic thinking and absurd valuation; and third, unrealistic business plans to the market demand - It is too dangerous to sell what the market does not need.

Remarking on Clean Real Estate Startup in Episode 7, Shark Tank Vietnam Season 3, Mr. Nguyen Thanh Hung, Vice President of the Board of Directors of Cengroup, said, “I see here another syndrome, the “want disorder”. I see that you want to work with laws, you also want to act as an intermediary agent to get a 5% commission and you also want to deal with technology. Your ideas are good but your approach is not right.” This is also a mistake that most young startups are currently facing.

Young entrepreneurs need to self-control

Currently, according to the General Statistics Office, an average of 360 ​​new businesses are established each day but bankrupt entities are equal to 81% of newly established corporates. These figures tell the courage and effort to fulfill startup dreams of young entrepreneurs and partly reflect their inaccurate choice of business plans that give rise to that high rate of bankruptcies.

Obviously, there are quite a few challenges for startups that are always in need of support to get through. Although there is no common solution to all startup problems, it is believed by experts that there is an interconnection between education and startup plus timely support to sustain startup ecosystem.

For example, the Ministry of Science and Technology initiated an itinerary to bridge startups with investors and work with U.S. partners in September 2019 to create an environment for Vietnamese startups to reach out to the world, connect with the world and acquire experience in building an innovative startup ecosystem. The ministry's delegation will visit the world's most successful technology corporations such as Amazon and Google and will study achievements of building and connecting innovative startup ecosystems in Silicon Valley.

Young startups in today's harsh business environment also need to transform themselves to adapt to new competitive contexts, have long-term vision, do business based on core values, sustainability and agility to the market. Ms. Phan Hoang Lan (from the Department of Scientific and Technological Market and Business Development - the Ministry of Science and Technology), who was honored among Forbes 30 Under 30 by Forbes Vietnam, stressed “When starting a business, you lack information, you do not look for people who can support you, you do not really understand users, you do not really listen to customers and market trends, and you will certainly fail.” But, it is important that, even if there are failures, the youth should continue to persist in starting a business because, without doing so, there will be no successful startups.

The startup movement, if strongly developed, will be an important factor for young startups to gain confidence and dare to accept challenge instead of choosing a safe direction. Starting a business is a difficult process and its pressures sometimes take away their faith and passion. Therefore, before starting a business, startups should slow down to listen to predecessors and study experiences of successful domestic and international businesses relevant to their field of activity to have more reasonable choices.

Mr. Nguyen Manh Dung, Head of Vietnam and Thailand Office, CyberAgent Capital Inc., said, startups must plow through mud, taste pain and tears to get success. From his experience, he reminded startups “Not to focus too much on initiatives because they may have already existed somewhere. Most importantly, whether such initiatives are for a majority community or not?” Vietnamese startups are less experienced than foreigners. Therefore, according to Mr. Dung, practical knowledge and vision are what Vietnamese startups need. To have these, they need a right mentor.

Luong Tuan