Hanoi: Some things to consider when establishing a Venture Capital Fund

On the afternoon of August 13, the Vietnam Fatherland Front Committee of Hanoi city held a conference to provide social feedback on the draft Resolution of the City People's Council regulating the organization and operation of Venture Investment Funds.

Chairwoman of the Vietnam Fatherland Front Committee of Hanoi city Nguyen Lan Huong speaks at the conference. Photo: PV

Standing Committee member of the City Party Committee, Chairwoman of the Vietnam Fatherland Front Committee of Hanoi City Nguyen Lan Huong and Vice Chairman of the Vietnam Fatherland Front Committee Pham Anh Tuan chaired the conference.

Briefly presenting the draft report on the above content, the representative of the Department of Finance said that one of the biggest barriers for innovative start-up businesses is the difficulty in accessing capital, especially early-stage venture capital. Meanwhile, private investors are often hesitant due to high risks, lack of information, and lack of investment management support tools.

On that basis, the establishment of a state-owned venture capital fund in Hanoi and regulations on the organization and operation of venture capital funds are necessary to provide strategic capital and non-financial support (training, consulting, international connections), helping innovative startups develop products, improve competitiveness and contribute to double-digit economic growth...

According to the draft, the Hanoi City Venture Investment Fund is established under a business cooperation contract between the Hanoi City People's Committee and no more than 6 other investors... The Fund's charter capital is formed from the capital contribution from the city's budget and the capital contribution of other investors according to the capital contribution contract in accordance with the Fund's Charter...

Dr. Architect Dao Ngoc Nghiem, Vice President of the Vietnam Urban Planning and Development Association. Photo: PV

At the conference, delegates all agreed on the necessity of issuing a resolution to meet practical requirements, in line with the orientation and policies of the Party and State.

Concerned about some specific issues, many delegates mentioned the content of the Fund being established under a business cooperation contract between the Hanoi People's Committee and no more than 6 investors, the legal status of the Fund...

According to Dr. Le Van Hoat (Democracy - Law Council), Article 4 (general principles) states: "Encourage the participation of domestic and foreign organizations, enterprises, and investment funds to contribute resources to the process of building and implementing the activities of the Hanoi City Venture Investment Fund", but Article 5, Clause 1 (legal status) stipulates: "The Fund is established under a business cooperation contract between the Hanoi City People's Committee and no more than 6 other investors".

“Why is there a limit of 6 private investors? Such a regulation is contrary to the principles set out above,” delegate Le Van Hoat asked.

Chairman of the Advisory Council for Democracy and Law (Vietnam Fatherland Front Committee of the city) Pham Ngoc Thao spoke at the conference. Photo: PV

Sharing the same view, representatives of the Hanoi Association for Innovation and Startups (Hanisa); Chairman of the Advisory Council for Democracy and Law (Vietnam Fatherland Front Committee of the city) Pham Ngoc Thao and Dr., architect Dao Ngoc Nghiem, Vice Chairman of the Vietnam Urban Planning and Development Association, expressed concerns about this regulation and all affirmed that there should not be specific regulations on the number of investors.

In addition, delegate Dao Ngoc Nghiem also requested further clarification on the Professional Advisory Council: Council members must be scientists and specialized experts (the draft mentions experts in general terms, so it is easy to cause arbitrariness). The organization that manages the fund to sign the contract is reasonable, but it is proposed that members should not only be managed by the organization but also by the members of the Management Council. The composition of the Advisory Council should include representatives from the Department of Science and Technology and the Department of Finance...

Meanwhile, emphasizing Article 3 of the Draft Resolution, Dr. Nguyen Tien Dinh, Member of the Central Committee of the Vietnam Fatherland Front, Vice Chairman of the Economic Advisory Council (Vietnam Fatherland Front Committee of Hanoi City) said that Clause 1, Article 3, explaining venture investment is unclear if it only states: "Venture investment is an investment activity through contributing capital to establish, buying shares, capital contributions of innovative start-up enterprises". Therefore, it is necessary to clarify: "Venture investment is an investment activity through contributing capital to establish, buying shares, capital contributions for enterprises testing new technologies, new business models, innovative start-ups, technology incubators and digital transformation that may have risks and delays in product results".

Delegates speaking at the conference. Photo: PV

Speaking at the end of the conference, Chairwoman of the Vietnam Fatherland Front Committee of Hanoi City Nguyen Lan Huong said that 10 opinions expressed at the conference all affirmed the necessity of issuing a resolution, because this is the legal basis to realize the provisions of the Capital Law and Resolution No. 57 of the Politburo on breakthroughs in science and technology development, innovation and national digital transformation.

In that spirit, comrade Nguyen Lan Huong requested the resolution drafting unit to quickly and with the best quality submit the dossier to the competent authority for promulgation according to regulations.

Source: https://hanoimoi.vn/ha-noi-can-can-nhac-mot-so-dieu-khi-thanh-lap-quy-dau-tu-mao-hiem-712498.html