**4. Entrepreneurship and startup market in Vietnam**

#### **4.1 Status of start-up activities in Vietnam**

As of 2016, Vietnam has about 110,100 newly registered enterprises, an increase of nearly 14% compared to the number of newly registered enterprises in 2015. Business ideas are not only realized in the form of enterprises but also in the form of non-agricultural individual economic establishments (household businesses), farms, or self-employed individuals. In terms of start-up industries, there is diversity in many fields, including real estate, agriculture, forestry and fishery, arts and entertainment, transportation and warehousing, and employment services. In addition, the remaining industries also recorded growth in the number of newly registered enterprises, such as science and technology, construction, healthcare, social activities, finance, banking, and insurance. The comparison between fields of activity shows that enterprises in science and technology are more prominent than those in other fields. This fact reflects the conditions of the 4.0 digital era, with the following characteristics: without too much initial investment, science and technology start-ups operate mainly on creative ideas and innovation exchange easily in the international environment through modern technologies, increasing the feasibility of ideas (*National Business Registration Portal*).

The scale of Vietnamese enterprises includes small enterprises, small and medium enterprises, and large enterprises. However, according to the overall assessment, small and medium-sized enterprises account for the highest proportion, with the number of enterprises increasing more strongly than large-scale enterprises. Data reported by the General Statistics Office show that in 2017, the whole country had 10,000 large enterprises, an increase of 29% compared to 2015, but these large enterprises only accounted for 1.9% of the total number of enterprises. Meanwhile, the number of medium enterprises increased by 23.6% the number of small businesses increased by 21.2%. This trend is like the size of start-up businesses with most startups having an age of less than 1 year, and the size of the workforce being quite small. Specifically, in 2016 there were 7% of start-up enterprises with more than 50 employees, enterprises with 10–49 employees accounted for 30%, and enterprises with about 10 employees accounted for nearly 63%. Most start-ups are less involved in export activities, typically their main customers are domestic organizations or individuals, accounting for 81% (*The summary report of the General Statistics Office*).

#### **4.2 Startup market in Vietnam**

Since the government's policy of encouraging start-up activities, business startups in Vietnam tend to increase rapidly during the period 2013–2017. This is reflected in the ratio of business activities at the start-up stage—TEA. This index includes successful start-ups and startups. In 2013, the TEA index reached only 15%, and by 2017, the TEA index reached 23%, higher than in previous years (Vietnam Startup Index Report). The process of developing the startup movement not only stops at organizations and individuals forging startup ideas but the startup ecosystem has also been formed and developed to actively support startup projects. of the community. In 2017, it was formalized through the SME law on the definition of a startup, more than 3000 startups are operating in the market, forming 22 funds, early-stage investors, 25 funds, and operation-stage investors. Activities, 9 startup communication focal communities, more than 40 government support organizations/incubators, 6 business support organizations, and more than 13 large-scale startup events.

Vietnam's startup market is diversified in many fields. Startups form and develop diversely in most areas of the economy. Most startups take technology as the foundation, based on technology development to form new business models. However, there are still many start-up projects in fields such as real estate, agriculture, forestry and fishery, arts and entertainment, construction, etc., which only form business ideas based on a combination of business factors to create a business model with breakthrough creativity and competitiveness in the market. Entrepreneurship goes hand in hand with the explosive growth of the digital era. It is undeniable that technology startups are now dominating start-up businesses. Compared between fields, information technology startups have outstanding numbers in general, capital mobilization is becoming more and more exciting in Vietnam because of the attractiveness of the market. Investment capital in startups in Vietnam in recent years has mainly come from innovative start-up investment funds, economic groups, business promotion organizations, and existing angel investors in the market including international organizations and individuals. According to statistics in 2018, there were 92 investment deals with a total capital of 889 million USD, which, 10 large transactions are reaching 734 million USD. For example, Yeah1 reached 100 million USD, Sendo 51 million USD, Topica 50 million USD, and 7 other deals worth over 30 million USD. Thus, in 2018, the total amount of capital poured into Vietnamese startups has tripled since 2017 (Annual report on investment in Vietnamese startups 2018).

#### **4.3 Opportunities and challenges for entrepreneurial/startups**

Vietnam has a complete startup ecosystem that supports startups with component actors such as funds and investors, incubators, startup support programs, and service providers. All these factors create opportunities for startups to form and develop. At the same time, Vietnam is one of the countries that strongly encourage the development of startups. From the Government to the Ministries and Agencies, they all promote the spirit of entrepreneurship. 2016 has been designated as the year of the "Start-up Nation" by the Vietnamese Government. Startups in Vietnam have great growth potential. However, the startup community also faces some challenges. Specifically, most local startups are small, at the seed stage, and with limited capacity for a breakthrough that needs further incubation. Some of the current outstanding challenges facing startups in Vietnam are limited access to finance, lack of business knowledge and skills, intellectual property issues, and the ability to meet regulatory requirements and necessary administrative.
