Capital markets pave the way for Vietnamese tech “unicorns”

In the digital age, science, technology and innovation are the driving forces and the core factor for Vietnam to rise up. The Politburo’s Resolution No.57-NQ/TW (issued on December 22, 2024) emphasises that science, technology, innovation and digital transformation are "top priority breakthroughs" in the new growth model.

At the recent workshop on the capital market's role in developing Vietnamese technology firms, Minh said that a strong capital market is crucial for fostering innovation among tech businesses. Leading nations such as the US, China and Singapore have been developing capital markets enabling startups to raise funds through Initial Public Offerings (IPOs), thereby creating "unicorns" - companies with more than 1 billion USD valuations.

Despite Vietnam’s vibrant startup ecosystem, the number of “unicorns” remains limited. By the end of 2021, Vietnam had four tech unicorns, including VNG, MoMo, VNLife (VNPay) and Sky Mavis, ranking third in Southeast Asia, following Singapore and Indonesia.

Amidst the wave of global digital transformation, technology is not only the driving force but also the core foundation that drives economic growth. (Photo: kinhtedothi.vn)

The Institute for Digital Economy Development Strategy (IDS) pointed out that Law on Securities No.54-2019-QH14 requires enterprises to be profitable for two consecutive years before IPO. However, most startups focus on research and development in their early stages, making it difficult to raise capital to expand their scale.

Dr Tran Van, Director of the IDS, commented that current forms of capital mobilisation are only suitable for startups in the early stages. As businesses grow, IPOs become a measure of success and a key milestone, helping them perfect their business models and contribute more to the economy. He suggested that Vietnam learn from international markets such as China, the US and Singapore, which have adjusted policies to support tech startups in going public more effectively. He also proposed that technology companies should be listed without being bound by the condition of “no accumulated loss”, especially on exchanges such as HoSE, HNX or the International Finance Centre.

IDS also recommended flexible listing policies for tech enterprises and the establishment of International Financial Centers in Ho Chi Minh City and Da Nang to attract domestic and foreign capital.

Mr Il-Dong Kwon, Managing Director of Boston Consulting Group Vietnam, highly appreciated the Government's policies to encourage innovation, typically Decision No.1236/QD-TTg on the Strategy for Blockchain Technology Development to 2025, with a vision to 2030. Mr Il-Dong Kwon also commented that Vietnam has great advantages with a young population knowledgeable about technology, a talented engineering force and a fast digital transformation speed. Fields such as fintech, artificial intelligence, e-commerce and blockchain all have strong development potential but still face obstacles in accessing capital and divestment mechanisms.

In addition, to develop the capital market, it is necessary to remove legal and institutional barriers and strictly handle manipulative behaviours to build investor confidence. In addition to capital issues, attracting and retaining talent is also an important factor, in ensuring high-quality human resources for the development of the technology industry.