Ho Chi Minh City Studies Establishment of Primary Capital Exchange for Startups

Ho Chi Minh City's Department of Science and Technology is working on the development of a primary capital exchange platform aimed at raising funds from investors for startups in their early, seed stages. This initiative involves consulting with experts and the city's startup ecosystem to address the benefits, challenges, and necessity of such a platform, which will form the basis for creating a legal framework for the primary market for innovative startups.

According to the Department of Science and Technology, primary capital funding, or the initial stage of raising funds when starting or expanding a business, is crucial for the survival and growth of innovative startups. The proposed capital exchange platform requires input from all stakeholders in the ecosystem, considering various perspectives to build a comprehensive proposal. However, for the platform to operate effectively, it must adhere to existing legal frameworks.

Phan Thị Quý Trúc, Deputy Head of the Intellectual Property and Innovation Management Division of the Ho Chi Minh City Department of Science and Technology, shared that the primary capital exchange platform for innovative startups aims to attract investment from early-stage investors.

This model draws from various international sources and is built around six main characteristics:

1. Transparent Legal Framework: The platform's operation requires a clear legal framework with defined regulations, fundraising procedures, and dispute resolution mechanisms to ensure transparency for startups and investors.

2. Advanced Technology Platform: The exchange must use secure, scalable technology to handle large volumes of transactions accurately and efficiently, protecting the information of experts, investors, and businesses.

3. Effective Risk Assessment and Management: The platform must have rigorous risk assessment and management processes, staffed by qualified personnel capable of evaluating startups' development stages and minimizing investor risks while eliminating fraudulent activities.

4. Continuous Information Updates: An updated system providing comprehensive information on startups and fundraising projects will help investors assess potential projects, the scalability of businesses, and investment risks.

5. Diverse Support Services: The exchange should offer various support services such as legal, financial, and marketing consulting, connecting startups with investors and other stakeholders to facilitate collaboration and support.

6. Financial Support Policies: Policies to support startup projects, including public-private partnership funding, will attract startups to the exchange. Investors will also receive support to ensure transparency and build confidence.

The proposal emphasizes that the exchange will be state-managed but must be operated by entities with the expertise to evaluate risks and potential projects accurately and understand the startup market. Effective management will encourage user engagement and promote the development of the city's and nation's innovative startup ecosystem.

Representatives from BambuUp suggest that while the state should establish operational principles and conditions based on legal regulations, excessive regulation could hinder the platform's openness, deterring participation and limiting funding. Thus, the state should guarantee key operational principles while allowing private sector management to ensure voluntary participation and market-driven operations.

This initiative by Ho Chi Minh City's Department of Science and Technology aims to create a supportive environment for startups to thrive, driving innovation and growth in the city's and the country's startup ecosystems.