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

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-ups 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 capital contributions from the city's budget and capital contributions from other investors according to the capital contribution contract in accordance with the Fund's Charter...

At the conference, delegates agreed with 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 forth above,” delegate Le Van Hoat asked.

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 as general, so it is easy to cause arbitrariness). The organization managing the fund signing 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 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, Deputy Head 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, purchasing shares, and capital contributions of innovative start-up enterprises". Therefore, it is necessary to clarify: "Venture investment is an investment activity through contributing capital to establish, purchasing shares, and 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".

Speaking at the end of the conference, Chairwoman of the Vietnam Fatherland Front Committee of Hanoi Nguyen Lan Huong said that all 10 opinions expressed at the conference 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 implement the fastest and highest quality dossier to submit 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