What Vietnam May Need to Attract Long-Term Venture Capital

Vietnam’s venture capital market is recovering, but attracting sustained institutional investment will depend on more predictable investment rules, stronger intellectual property protection and credible exit opportunities.

Vietnam is entering a critical phase in the development of its venture capital ecosystem, with the focus shifting from attracting investment to building the conditions for capital to flow consistently across the startup lifecycle. Venture capital funding reached US$509 million in 2025, a 28% increase from the previous year, according to the *Vietnam Innovation & Private Capital Report 2026*. The next opportunity lies in translating this momentum into a deeper investment market, where startups can access capital, institutional investors can structure investments with greater certainty, and successful businesses have credible routes to generate returns.

Realising that opportunity will require progress across several interconnected areas, from simplifying cross-border investment structures and strengthening intellectual property protection to expanding exit options beyond public listings. Vietnam has introduced reforms across its investment and financial-market frameworks. How effectively these measures translate into practical improvements will help determine the country’s ability to attract long-term institutional capital.

Investors are moving away from growth strategies that prioritise market share without demonstrating a clear path to profitability. Founders must increasingly show that their businesses can retain customers, manage costs and generate sustainable revenue, while offering investors realistic exit prospects.

Khương Nguyễn Công Thành (Tommy), Senior Investment Associate at Capital JDI, said founders in Vietnam are adjusting their fundraising and operating strategies to reflect these expectations.

“As investors move past “growth at all costs” toward strict valuation discipline and 18-to-24-month paths to profitability, founders in Vietnam are rapidly reshaping their fundraising strategies around net revenue retention, unit economics, and realistic M&A or secondary trade-sale exit horizons rather than speculative IPOs. Local founders are extending runway by cutting consumer subsidies, shifting toward B2B monetization streams, and leveraging Vietnam’s resilient technical talent to keep overhead lean,” he said while conversing with AsiaTechDaily.

These changes can strengthen startup fundamentals, but operational discipline alone cannot resolve the structural challenges investors face when entering and exiting the market.

Investment rules must make cross-border deals easier

Vietnam’s 2025 Investment Law, which took effect on March 1, 2026, introduced changes intended to simplify investment procedures. These include allowing foreign investors to establish economic organisations before completing investment registration procedures, subject to applicable market-access conditions, reducing the number of conditional business sectors and expanding provisions for investment project transfers. Decree 96/2026/ND-CP subsequently established implementing rules for the revised framework.

The reforms could reduce administrative friction, although their impact will depend on implementation and how consistently the rules are applied to individual transactions.

Corporate structuring remains another consideration. Some Vietnamese startups seeking international funding use offshore holding companies, often in Singapore, which own their Vietnamese operating businesses. While these arrangements can accommodate cross-border investment, establishing and maintaining them can involve legal costs, compliance requirements and restructuring complexity. For early-stage companies, these expenses can divert resources from product development and market expansion.

Tommy said further reforms are needed to address these barriers and build a more mature investment environment.

“However, turning Vietnam into a truly mature destination for long-term institutional capital will require key regulatory reforms, including streamlining FDI approvals and offshore holding structures, building deeper secondary private markets, and establishing clear IP and sandbox frameworks for emerging technologies,” he said while conversing with AsiaTechDaily.

The challenge is to make investment arrangements predictable in practice, giving investors greater clarity over ownership, shareholder rights and the legal mechanisms governing their investments.

Intellectual property protection is central to technology investment

For technology startups, intellectual property can be central to a company’s competitive advantage and valuation. Investors evaluating businesses in software, artificial intelligence and other technology sectors need confidence that startups own or hold enforceable rights to the assets underpinning their products.

Vietnam amended its Intellectual Property Law through Law No. 131/2025/QH15, which took effect on April 1, 2026. The amendments seek to improve intellectual property procedures and protection, including in the digital environment, while strengthening the commercial treatment of intellectual property assets. However, legislative changes alone do not establish how effectively rights will be enforced. Investors still need to verify ownership during due diligence, assess the risk of infringement and determine whether intellectual property can support commercial partnerships or financing.

Consistent implementation will be essential if Vietnam wants technology companies to attract investment on the strength of defensible innovations rather than growth projections alone.

Exit opportunities remain essential to long-term capital

Even when investors identify promising startups, their willingness to commit capital depends partly on how they expect to realise returns. Public listings are one potential route, but acquisitions and secondary share sales can also provide liquidity. Vietnam’s limited record of formal IPO exits among venture capital and private equity-backed companies highlights the importance of developing alternative routes. Grant Thornton Vietnam’s Private Equity in Vietnam 2025 survey identified trade sales and secondary buyouts as preferred exit routes among surveyed private equity investors, while extended exit timelines remained a concern. Although private equity and venture capital have different investment horizons, the findings illustrate the value of exit flexibility across private markets.

A deeper secondary market could allow existing investors to sell stakes to other investors without requiring a company to be acquired or listed. Making these transactions more practical would require clear share-transfer procedures, reliable company information and adequate shareholder protections.

Vietnam’s broader capital markets are also developing. The Vietnam Innovation & Private Capital Report 2026 identifies the KRX trading system, improvements to market infrastructure and Vietnam’s reclassification to FTSE Russell’s secondary emerging-market status, effective September 2026, as important developments. These changes may strengthen the country’s links to global capital, but public-market progress does not automatically resolve liquidity challenges in private startup investments.

Regulatory sandboxes could support emerging technologies

Clear rules for emerging technologies could further improve the investment environment. Regulatory sandboxes allow eligible businesses to test innovative products and services within defined boundaries, helping companies and regulators assess new business models while managing regulatory risks.

Vietnam’s International Financial Centre initiative includes efforts to develop fintech and financial innovation. In April 2026, the Vietnam International Financial Centre in Ho Chi Minh City launched a Fintech Hub with partners including the London Stock Exchange and HDBank. Such initiatives could help startups navigate regulatory uncertainty and connect with investors. Their effectiveness will depend on clear participation criteria, transparent operating rules and a practical path from testing to commercialisation.

Vietnam’s venture capital recovery provides a foundation for further growth, but sustaining it will require reforms to deliver practical results. Investors need more than a growing startup pipeline: they need investment structures that work, intellectual property rights they can rely on and credible routes to liquidity. The decisive test is whether Vietnam can translate policy changes and market initiatives into lower transaction friction, greater investment confidence and more viable exits. That is what will determine whether the current recovery attracts sustained institutional capital or remains concentrated in a narrower set of deals.

Quick Takeaways

• Venture capital funding is gaining momentum: Vietnam attracted US$509 million in VC funding in 2025, up 28% year over year.
• Founders are prioritising sustainable growth: Investors increasingly expect stronger unit economics, better revenue retention and credible paths to profitability.
• Investment reforms need practical impact: Simplifying foreign investment procedures and cross-border holding structures could reduce friction for international investors.
• Intellectual property protection matters: Consistent enforcement of IP rights will be important for attracting investment into technology and innovation-driven startups.
• Exit opportunities remain critical: Deeper secondary markets, acquisitions and other viable exit routes could strengthen Vietnam’s appeal to long-term institutional capital.
• Regulatory clarity can unlock emerging sectors: Clear sandbox frameworks could help innovative startups test new business models and build investor confidence.