Vietnam edges towards venture capital breakthrough moment

*This article is adapted from * PressReader

Vietnam's startup ecosystem is entering a pivotal phase in its development, marked by strong entrepreneurial energy and a rapidly expanding digital economy, yet still constrained by structural bottlenecks that limit the flow of capital needed for growth.

From the vantage point of a regional venture capital investor, the country distinguishes itself among its peers through its dynamic entrepreneurial culture, depth of engineering talent, and an open, export-oriented economy that continues to draw the attention of global capital.

In 2025, Vietnam's digital economy is scaling at pace, while angel and seed-stage funding has remained notably resilient, laying a solid foundation for a new generation of technology-driven founders.

However, despite these promising fundamentals, the market has yet to unlock the larger funding streams required to propel startups into their next stages of expansion. Observing the evolving dynamics of the Vietnamese venture landscape, investors point to two critical impediments that continue to hold back the full inflow of capital: a persistent gap in early-stage growth funding, and the need for clearer, more accessible exit pathways.

These barriers are not new, but they have become more pronounced as the ecosystem matures and founders increasingly look beyond the seed stage for the capital necessary to professionalise operations and scale into regional markets.

The first challenge stems from what investors describe as a funding chasm between Vietnam's vibrant early-stage environment and the next layer of financing. While angel and seed rounds are active, few local fund managers are equipped to deploy the $2-3 million checks required for an early Series A round.

This missing layer of capital is crucial: it serves as the bridge that transforms promising seed-stage companies into ventures mature enough to attract interest from international funds. Without it, many startups stall before they can validate their business models at scale or strengthen their governance to meet global standards.

The second issue relates to exits, which is an essential component of any functioning venture capital ecosystem. Capital naturally gravitates towards markets where liquidity is accessible, and Vietnam must continue improving its pathways for investors to realise returns.

Encouragingly, structural changes in the stock market are beginning to shift sentiment in a positive direction. The long-awaited KRX trading system, which went live in May, marks a major modernisation milestone, enhancing the technological backbone of the market.

Over time, the establishment of an innovation-oriented listing board on this platform will be critical for giving high-growth companies a clearer avenue to the public markets.

At the same time, FTSE Russell's pending reclassification of Vietnam to emerging market status, expected by September 2026, is poised to expand institutional participation and unlock substantial new capital inflows.

Regulatory reforms are also playing a role in shaping a more conducive environment for investment. The 2024 ESOP reforms, which removed the requirement for State Bank of Vietnam registration, were welcomed by investors and founders alike for making it easier to attract and retain top-tier talent. Continued progress in clarifying tax rules and enabling smoother cross-border capital flows will further strengthen Vietnam's appeal, ensuring that the operational landscape keeps pace with the country's economic momentum.

Addressing the ecosystem's challenges, however, requires coordinated action from both local and international funds. Their roles are distinct yet complementary. Local investors are particularly well-positioned to identify early winners, install strong governance practices, improve financial reporting standards, and help companies prepare for the scrutiny of global markets.

International funds, meanwhile, bring cross-border networks, access to substantial follow-on capital, and the experience necessary to help Vietnamese companies scale regionally and globally. Together, this partnership forms the backbone of a maturing venture ecosystem.

The outlook remains optimistic. Vietnam has already secured its position as a regional engineering and manufacturing hub. With a deeper bench of local venture partners and a more supportive exit environment emerging over the next few years, the country is poised to become the region's next innovation centre, producing a new wave of consumer-focused and globally competitive companies.

Backing local champions such as Metub and Coolmate today, investors express confidence that Vietnam will soon nurture its next generation of regional and eventually global leaders, building on more than three decades of experience scaling transformative businesses around the world.

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