Ho Chi Minh City creates “seed capital” for technology development

Mr. Hoang Duc Trung, Director of VinaCapital Ventures - in charge of running the Ho Chi Minh City Venture Capital Fund.

Sir, in the current context, why does Ho Chi Minh City need a locally initiated Venture Capital Fund?

Mr. Hoang Duc Trung: The city is currently the locality with the largest startup ecosystem in the country, concentrating roughly half of Vietnam's startups. However, one major bottleneck is the lack of domestic venture capital funds that are large enough in scale and operate according to market principles.

Capital for startups, especially at the growth stage, still depends heavily on foreign funds. Meanwhile, domestic support programs mostly stop at the level of grants and incubation, and have not yet formed a financial component capable of accepting risk to invest alongside businesses.

Therefore, the city has formed the Venture Capital Fund in order to create an intermediary institution connecting policy directions with the actual flow of capital for innovation. Establishing the fund is also part of the city's roadmap to restructure its growth model toward greater reliance on science-technology and the digital economy, tied to major orientations such as Resolution 57-NQ/TW, Resolution 98/2023/QH15 and the regulations on developing venture capital funds.

What sets this fund apart from previous startup support programs?

Mr. Hoang Duc Trung: The biggest difference is that the fund is organized as a joint stock company, operating according to the enterprise mechanism and market principles, instead of an administrative-style support fund model. The fund's initial charter capital is VND 500 billion, of which the Ho Chi Minh City budget contributes VND 200 billion (equivalent to 40%), with the remainder contributed by the private sector. Under the roadmap, the fund's scale will be raised to around VND 5,000 billion by 2035. This is a public-private partnership model, in which the State capital plays the role of activating the market, not replacing it.

The fund is designed with a governance structure comprising a general meeting of shareholders, a board of directors, a supervisory board, an executive board and an independent investment committee; it may also hire a professional fund management unit to ensure that investment decisions are based on criteria of efficiency, transparency and expertise. This is especially important for venture capital - a field that requires the ability to accept risk but within a clear risk-management framework.

You have emphasized the fund's role as "seed capital"; how exactly should this be understood?

Mr. Hoang Duc Trung: The scale of VND 500 billion is significant not only financially, but also as a policy signal. The fund is expected to play the role of "seed capital", meaning that every dong of State capital can attract an additional 2-3 dong of private capital into the investment, thereby raising the proportion of social resources in the total capital.

Further ahead, we expect the fund to create a ripple effect and become a "magnet" attracting private and international capital flows into strategic technology fields - where the private sector is usually cautious due to high risk and long payback periods. In this way, the fund's role is not only to invest directly, but also to lead the market.