Popular Science Magazine interviewed Mr. Hoàng Đức Trung: The country's first local venture capital fund

Recently, Ho Chi Minh City officially launched HCMC Venture Investment Fund, the country's first local venture capital fund model. On the occasion of Vietnam Science and Technology Day (May 18), Popular Science Magazine conducted an interview with Mr. Hoàng Đức Trung on the topic "HCMC Venture Investment Fund - a new driving force for science, technology and innovation in the city", to clarify the Fund's operating mechanism, as well as opportunities for the startup community and science and technology businesses in Vietnam. Ho Chi Minh City.

1. For the first time, Ho Chi Minh City has a Venture Capital Fund, with the operating legal entity being HCMC Venture Investment Fund. Sir, what does this mean in promoting science and technology in TP?

The biggest priority in the coming period is that the parties in the ecosystem need to work together to create an environment that is trustworthy enough so that long-term capital can flow into innovation in a sustainable way. This lies not only in the size of capital, but more importantly in the policy framework, financial infrastructure and how the market operates. When non-market risks, especially legal and policy risks, are minimized, and there is a liquid market, investors will have more confidence to participate in fields with high levels of uncertainty such as technology and innovation.

Ho Chi Minh City's establishment of a venture capital fund under the public-private model is not simply an additional source of capital, but marks a structural change in the way the State participates in the innovation ecosystem. The core difference lies in the fact that the State not only plays a policy-creating role, but directly becomes a "companion investor", accepting to share risks with the private sector according to market principles.

In the context of science and technology fields, especially core technologies, always accompanied by high levels of uncertainty, this mechanism is very important in "relieving" psychological barriers of private and international capital flows. When the State participates as seed capital and designs a controlled risk-taking mechanism, the market will have more confidence to participate sooner in areas that were previously considered too risky or lacked a clear legal corridor.

More importantly, the fund can contribute to standardizing the way capital flows into innovation, shifting from a movement approach to a methodical, disciplined, and long-term value-oriented investment mechanism. This is the necessary foundation for science and technology to truly become the new growth engine of Ho Chi Minh City.

2. HCMC Venture Investment Fund has just launched with a scale of 500 billion VND. What is the first thing the fund will deploy this year?

In the first year, the fund's biggest priority will not be "to go fast in disbursement", but to build a solid enough operating foundation according to market standards. This includes establishing a rigorous due diligence process, a transparent decision-making mechanism and a risk management system appropriate to the characteristics of venture capital.

At the same time, the fund will focus on forming a fundamental initial portfolio, with a balanced approach between businesses that have cash flow and scalability, and technology projects with long-term breakthrough potential. Building a portfolio in this direction is not only to seek profits, but also to establish a clear "risk appetite" and investment philosophy for the fund right from the early stages.

Another focus is on building and activating the ecosystem around the fund, including connections with large corporations, private investors and international partners. In venture capital, capital is only one part, but the ability to help businesses access markets, data, customers and partners is the determining factor in growth.

3. Which group of businesses will the Fund prioritize investing in? Which areas will be considered the investment focus in the first phase?

The fund will prioritize technology businesses that have begun to pass the testing phase, enter the growth phase, and show signs of proving product fit for the market. This is a group of businesses with the ability to absorb large capital and convert capital into real growth in a relatively short time.

In terms of field, the focus is on core technology areas and long-term value creation such as AI, semiconductors, biotechnology, green energy, along with digital transformation platforms with wide applicability and clear commercialisation.

However, the fund's approach will not be spread out. Instead, it is selectively focusing on segments where Vietnam already has a certain foundation or has the opportunity to participate more deeply in the global value chain. This helps optimize the efficiency of capital use and increase the probability of creating truly competitive businesses.

4. Why did the fund choose to focus on the capital round Series A, B, instead of the seed stage like many other startup funds?

The focus on Series A and B comes from the fact that this is the "low point" of the Vietnamese startup ecosystem. While the seed stage still receives interest from small funds and angel investors, and the late growth round still has international capital participating, the accelerator stage lacks capable leading funds.

This is also a pivotal stage, when startups need capital to expand scale, perfect the business model and prove operating capacity. Without appropriate capital sources, many potential businesses will be "stuck" on a small scale and have difficulty progressing to the next capital calling rounds.

Therefore, the fund's participation in Series A, B not only solves the capital shortage, but also contributes to improving business quality through the application of higher standards in governance, finance and growth strategy, combined with support for governance and ecosystem connection at home and abroad, it is expected to help narrow this gap in time. to.

5. The much-mentioned breakthrough is the "controlled risk acceptance" mechanism, even allowing a risk threshold of up to 50% of state capital. Specifically, where will the fund "risk" and how will it control that risk?

“Accepting controlled risk” is first of all changing the way of looking at risk in venture capital. The fund does not aim to avoid risk on each investment, but manages risk at the portfolio level, accepting unsuccessful investments, as long as the overall portfolio creates outstanding value in the medium and long term.

“Venturing” will focus on areas with breakthrough potential but high levels of uncertainty, such as core technologies or new business models. However, risks will be controlled through strict investment discipline, multi-dimensional appraisal process and reasonable capital allocation among different asset groups.

In addition, combining with the business ecosystem and partners is also an effective risk reduction tool, helping startups increase their ability to commercialise and expand, thereby improving the probability of investment success.

6. Ho Chi Minh City aims to increase the fund size to VND 5,000 billion by 2035. In the next 3-5 years, what specific results do you expect the fund to produce to prove this model is successful?

In the first 3–5 years, a fund's success should not be measured by a few standout investments, but by its ability to build a quality portfolio and create businesses that truly have sustainable value, are regionally or globally competitive, and have a positive impact on the ecosystem. In addition, the fund needs to demonstrate its "market-leading" role, meaning that each dollar of capital of the fund can attract more capital from the private and international sectors. When this happens, the fund not only generates financial returns, but also triggers a larger capital flow to the entire ecosystem.

More importantly, if the fund contributes to building market confidence, standardizing the investment process and establishing a transparent operating mechanism, those results will be more fundamental and sustainable than any short-term index.

7. If the fund operates as expected, how do you imagine the startup ecosystem and technological appearance of Ho Chi Minh City will change in the next 5-10 years?

In the long term, if the fund operates effectively, the biggest impact may not be in the number of deals, but in changing the way the ecosystem operates. The Fund will act as a platform where bold ideas, ambitious technology businesses and long-term capital flows meet in a transparent and disciplined framework, creating sustainable real value instead of short-term growth, contributing to shaping a new way of operating the venture capital market in Vietnam.

Startups will also grow in a more favourable environment where they not only have access to capital but are also connected to the business ecosystem, market and partners, thereby significantly shortening the journey from idea to commercialisation.

At the city level, Ho Chi Minh City can form a new class of technology enterprises that can compete regionally, and at the same time attract stronger international capital flows. At that time, innovation will no longer be a slogan, but will become a real and sustainable growth driver for the economy.