Startup 2024: Many challenges but also many opportunities

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As a judge and investor of the Shark Tank program for many years, can you share about the investment situation in Vietnamese startups in 2023?

I was on Shark Tank as a guest, so my role had its limitations. However, through our investment management company Saigon Asset Management (SAM) and through personal investments, we have invested in and raised capital for more than 25 startups in Vietnam and United States. In 2023, due to global economic and geopolitical challenges, investment in Vietnamese startups has decelerated, but the valuation of startups in Vietnam still remains high because investors The founder still maintains a fairly optimistic spirit. We expect this to change in 2024 as global economic forecasts remain gloomy and high valuations will not be sustained.

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In the context of general economic difficulties, what advantages and disadvantages does the startup sector encounter?

During these difficult times, startups have the opportunity to restructure their businesses to become more agile and efficient, build capabilities and capacity, develop alliances with strategic partners new, mergers and acquisitions… At the same time, startups will have difficulty raising capital due to investor withdrawal. However, there are still investors who are looking for opportunities in difficult situations or what we often call “exceptional situations”. Businesses are struggling but if they have proprietary technology or a large customer list, they are still very attractive to some investors and there are mergers and acquisitions (M&A) opportunities.

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Investing in startups is likened to “throwing money out the window”, because this is a very risky investment field where more than 70% of startups fail. How do you and the Sharks choose startups to invest capital in while still avoiding risks?

It is a fact that more than 70% of investments in startups will fail. My understanding from conversations with some of the Sharks is that they set a certain budget to invest each season and accept a certain failure rate in exchange for exposure and indirect advertising for individuals and businesses. There are cases where we, as investors, will support “serial entrepreneurs” (entrepreneurs with consecutive projects) when they have demonstrated previous success, or their products are related. to current investments in our portfolio, thereby minimizing risk. Therefore, this is not quite as “throwing money out the window” as some may think.

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According to you, to promote the development of the startup sector, what do management agencies, businesses, and investment funds need to do?

To support the development of startups, Government agencies can consider establishing additional promotion centers and separate “incubators” in urban areas and financial commercial centers such as worked in the US, China and Hong Kong. Locations far from the financial center (such as Saigon Hi-Tech Park in District 9) are difficult for many entrepreneurs to travel and interact with customers and partners effectively.

Businesses and investment funds can consider sponsoring these accelerators and “incubators” to demonstrate support and give back to the community (CSR), as well as provide core elements such as technology development (FPT, CMC, VNG), capital investment (various venture capital funds), legal support (law offices), accounting and financial support (the Big 4 auditing firms) and angel investor network.

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It is known that the fields that SAM has targeted to invest in over the years are technology and smart agriculture. Why did SAM choose these two areas to invest and not other areas?

Personally, I want to use my skills and abilities to invest in businesses that benefit the environment, have a social impact, and leave a meaningful legacy. That’s why, over the past five years, we have supported ESG (Environmental, Social and Corporate Governance) and technology-related investments, focusing on key sectors including commerce and technology. e-commerce, artificial intelligence, semiconductors, education, health care and smart agriculture. Each of these areas can benefit our health, future generations and the environment. These sectors also demonstrate a clear high demand from investors and end consumers. These also continue to be the areas that SAM is interested in and chooses to invest in in 2024.

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Your prediction about the startup market in 2024, in your opinion, will there be great opportunities for startups in 2024? What are the opportunities and challenges for both investment funds and startups in 2024?

Indications from the fourth quarter of 2023 suggest that 2024 will be challenging. However, difficult times will be an opportunity for excellent companies to rise higher, while weak companies will disappear if they do not prepare for the “storm” properly. Smart investors will continue to hunt for good deals during tough times because they know they have more leverage with available cash and the valuations of startups will become more reasonable.

For investment funds, pressure from investors who have invested in the fund will increase because some investors will want to withdraw money from the fund, or expect the fund to find very good opportunities quickly. Therefore, we expect that some investment funds may close and some will be very active in finding good deals to invest in.

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VnEconomy January 31, 2024 15:00

The content of the article was published in Vietnam Economic Journal No. 05-2024 published on January 29, 2024. Dear readers, we invite you to read here This: Kinh-te-viet-nam

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