Ministry of Science and Technology of Viet Nam

Initiative for Startup Ecosystem in Vietnam

The value of companions to startups

To survive, startups not only need their own ideas, capital or efforts, but more than that, they need to be nurtured and learn from experiences of previous generations of entrepreneurs. The value companions bring to startups is, of course, not only money.

Over the past 5 to 6 years, many startups have succeeded and then become mentors, even angel investors into new startups, aiming to support and create the next generation of entrepreneurs. About 5 to 7 years ago, this might have been new, but now, it is noticeable that many successful founders, despite being busy with their business, are always ready to give advice and share experiences and help startups and founders in many ways such as Hung Tran GotIt, Hung Dinh DesignBold, Le Diep Kieu Trang (former Misfit, Avero) , Dao Lan Huong (Teky), and Nguyen Khanh Trinh (CleverGroup).

Otrafy development team. Source: NVCC

This shows that the entrepreneurial culture of innovative entrepreneurship has just been nurtured in the ecosystem.

The relationship between an investor and a startup should be a friendship instead of merely the relationship between the venture capitalist and the capital receiver, between the startup and the investor. The most important element is that they must share the same opinion.

30-minute meetings

Tran Thanh Tung, BOD of Loli & The Wolf said that he himself is a person with theoretical knowledge about business but not much practical experience. The mentors from SME Mentoring and the Business Startup Support Centre (BSSC) with decades of “battling" in the marketplace have given him all the necessary knowledge. “For example, last March, when financial statements showed 1.6 billion loss per month for an unknown reason, I turned to an advisor. She heard my story and felt so empathized, so she helped me with the financial reports. Miraculously, in just 15 minutes, she pointed out the error and we spent the remaining 15 minutes of the meeting coming up with a solution. Since then, the system of Loli & The Wolf has grown steadily ”, Mr. Tran Thanh Tung said.

In another instance, when noticing that the café branches in Loli & The Wolf's ecosystem was yielding 15% per month, the CEO of the startup wanted to open more stores to increase profits. After his two mentors raised only five questions about the purpose, strategic planning and others, Mr. Tung decided not to open more stores because he could not meet the basic requirements.

Loli & The Wolf's stories reveal the role of mentors in a startup's development. Not only investing money, training business strategies, building customers or marketing strategies, connecting with investors and customers, investors and advisors are also present in the turning points of startups to give advice, point out the do's and don'ts, mistakes and fixes, etc.

If Loli & The Wolf's meeting with a companion could help the startup prevent losses for months, Deepcare, a startup that provides solutions to hospital overcrowding, meets a companion to help them “turn a new page” after two years of establishment and failed efforts to enter the market. “Before I met the head of the Medtech Village Ngo Thanh Son at TECHFEST 2020, I still felt that I might fail once more. Before that, we did not have a consultant on the medical market in Vietnam. I and the members mostly research the orientation by ourselves”- Mr. Hanh Nguyen, CEO of Deepcare shared.

After that meeting, although the technology and product ideas being long-term is right, Deepcare is re-oriented to develop products that match reality. "How to get users and the market share fastest" - is what Mr. Ngo Thanh Son pointed out to Deepcare. With decades of experience operating in the medical field and currently being Deputy General Director of VMED Group, Mr. Ngo Thanh Son points out to Deepcare what the products demanded by the market are. At the same time, he also emphasizes that customers are not only patients, but also clinics and hospitals. Another issue that Deepcare was consulted is how to sell. They should not only sell separately, but can also integrate with other units' products to form a total solution, not only focusing on the cities like Hanoi, Saigon but also can go to other provinces.

"Those are valuable things I learned from VMED Group and Mr. Ngo Thanh Son" - Mr. Hanh Nguyen said. After changes in business strategy, products as well as thanks to the connection, many businesses are now ready to integrate with Deepcare to form a large service delivery solution.

Investment funds, investors with many years of experience can also offer wide-ranging networking. Therefore, a US young startup in Vietnam with less than a year old like Otrafy, when joining the BLOCK71 program, was connected with Masan, the leading food retailer in Vietnam, to introduce about the solution this startup is providing.

If in the US, Techstart helped Otrafy connect to Cargill, the world's leading food supply group using the testing in food safety information management of suppliers, in Vietnam, there is support from BLOCK71. Nhat Nguyen, Founder of Otrafy said: “The best thing I get from investors is mentors. No one can be good in every field. But in front of the investors, we can tell them that although I'm not good, my mentor is an expert in this field”.

Choosing an investor

In the startup community, there is a saying: "Do not raise capital at all costs". Looking back at the development journey of a new startup, we can see how valuable a companion is. “Everyone's $1 million is the same, therefore, investment funds are only different in knowledge, experience, relationships, portfolio”, Mr. Bui Thanh Do , Founder of ThinkZone investment fund told Khoa hoc va Phat trien Newspaper.

Therefore, according to startups, the first criterion they give when choosing investors is sharing the same opinion. According to Mr. Doan Xuan Quang, Founder of Viet Su Giai Thoai, for a startup that wants to create social value like his, he needs people to understand the field in which the startup is operating and their value. “For a project that creates social value, investors need to accept that they cannot immediately gain profit but need to invest in the long run. Once understanding the model, the new investor will believe in the outlined plan.”, Mr. Doan Xuan Quang explains and believes that investors and startups need to become friends instead of merely the venture capitalist and the capital receiver, the startup and the investor.

Agreeing with this viewpoint, Le Hoang Thach - founder of Wewe, a startup providing audiobooks and copyrighted podcast Voiz FM, said, if investors do not understand the industry, field and vision of the startup, they will easily “wonder” with questions like “Why isn’t it profitable?”, “Why spend so much money to buy this, spend on that?” and so on.

“So the time for creating and operating will be used to explain and convince investors” - Mr. Le Hoang Thach said.

Meanwhile, with his experience in the US as well as enjoying great benefits from Techstar's support, Nhat Nguyen, Founder of Otrafy said that the criteria for choosing an investment fund and mentors are networking and other resources besides money. Otrafy provides food safety information management solutions for food factories, so they need to look for investment funds, ecosystem builders that have networking with big businesses in food production or agriculture. This will help Otrafy reach customers faster. As a B2B product seller, Otrafy needs to find similar businesses to share experiences, or cooperate with each other. "If I go to a companion whose networking is primarily in medical and mainly sells B2C, I must be wrong", Nhat Nguyen expressed. Recently, at BLOCK71, he has approached many startups with experience selling B2B in Vietnam to large enterprises and is working with them every week to learn from their experience and apply those in practice.

Maintaining the relationship between a companion and the startup is also very important. Although SME Mentoring and the Business Startup Support Centre (BSSC) program have long ended, mentors have been on hand to support Loli & The Wolf for the past 6-7 years. Even when this startup needs support, according to Mr. Tran Thanh Tung, BSSC is ready to connect directly.

“I have to always do my role well because I always think I'm grateful to the organizations that give me support. If I do it properly, maybe next time they will not help me anymore. We do our best to prove that the organizations have supported the right people. If you do not know how to be a companion, that relationship will be broken”, Mr. Tran Thanh Tung said.

Source: Khoa hoc va Phat trien Newspaper



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