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VCs seeking to operate in the country can obtain their licenses within three days of their application, regardless of their fund size

Startups seeking to raise money in Vietnam may soon find themselves with more options; the Ministry of Planning and Investment has drafted a new set of rules aimed at lowering the barrier for VCs to enter the market, reported Thanh Nien News.

This move is part of Vietnam’s efforts to become a haven for 5,000 tech firms by 2020.

According to the proposal, VCs can obtain their operational license within three days of application, with no limits on their fund size.

Currently, VCs are required to by abide by the laws on securities investment funds. This means they need a minimum capital of VND50 billion (US$2.2 million), or at least 100 investors.

The caveats of such a condition means many private investors or angel investors are left out of the club. According to a survey conducted by the ministry’s Agency for Enterprise Development, many such investors have a budget of between US$5,000 to US$50,000.

The report also cited the fact that major investment funds in country are often operated by local corporations such as Vietcombank and state-owned energy company PetroVietnam.

Also Read: 5 must-learn tips for e-commerce entrants in Vietnam

These corporations are more inclined to back projects that are worth at least a few hundred thousand dollars, as opposed to startups in the midst of finding a viable revenue model or struggling to break even.

Tech-focussed VCs have only begun establishing beachheads into Vietnam. In March this year, leading startup accelerator and incubator 500 Startups launched a US$10 million micro-fund aimed at delivering up to 150 investments.

The Topica Founder Institute reported that 67 Vietnamese startups were funded last year — an increase of more than twofold from 2014.

48 per cent of these investments were seed funding provided by overseas investors.

If these new laws for VCs are passed, Vietnam could see a rapid expansion of its tech ecosystem, with more foreign and domestic VCs and angel investors funnelling money in.

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