A New Fund, A New Mindset: Hanoi Launches Venture Vehicle to Fix Its Startup Capital Gap

With a 49% state cap, public–private design and a 10-year pilot, the Hanoi Venture Capital Fund aims to crowd in private money for deep tech and smart-city innovation—not control it.

Hanoi is set to roll out the Hanoi Venture Capital Fund (HVCF) on December 22, backed by as much as VND600 billion (approximately US$24 million) in initial public capital. The fund will be the city’s first venture-focused investment vehicle, directing money toward tech-enabled and innovation-led startups instead of conventional infrastructure or industrial ventures.

The HVCF is structured as a public–private partnership, with the city’s contribution capped at 49% of the fund’s charter capital, and the rest to be contributed by up to six private “strategic investors.” This cap is deliberate: it prevents the state from holding a controlling stake and is meant to reassure investors that capital will be deployed on market terms, not through administrative intervention. 

A Venture Fund Without a Legal Entity

One of the most distinctive features of HVCF is its structure. Instead of creating a new state-owned company or statutory entity, Hanoi will set up the fund via a business cooperation contract (BCC). It will be a contractual arrangement with no separate legal status.

City leaders say this gives the fund:

• Speed and flexibility similar to private VC partnerships
• Less bureaucratic friction, since it isn’t run as a classic SOE
• The ability to hire a professional fund manager and follow global VC governance norms

City leaders have emphasized that Hanoi will not oversee the fund from above or interfere in investor decisions. Instead, the government will participate as an equal partner, sharing both risks and returns. The state’s stake will be represented by an official at the department-director level—ensuring accountability while leaving operational and investment choices to professional fund managers.

This is a notable shift from traditional “state fund” models in Vietnam, where preservation of capital often outweighed risk-taking—a tension that has historically constrained genuine venture investing.

Why Hanoi Thinks It Needs Its Own VC Fund

On paper, Hanoi has a strong foundation: major universities, research institutes, IT firms and a growing startup community. In practice, officials and investors say there is a serious early-stage capital gap, especially in deep tech.

Local incubators and experts have flagged three persistent bottlenecks: 

1. Most Vietnamese startups cluster in IT and consumer internet, while high-tech and deep-tech fields—like new materials, nanotechnology, cell technologies—remain underfunded.
2. R&D spending is low, historically under 1% of GDP, and lab infrastructure is fragmented.
3. Universities and institutes hold valuable core technologies, but there has been no clear mechanism to transfer those assets into spin-offs and VC-backed companies.

HVCF is explicitly designed as catalytic capital to unlock this bottleneck. The city’s money is not meant as a subsidy, but as a signal and risk-sharing layer that gives private investors the confidence to back earlier and deeper R&D-driven plays.

What the Fund Will Back: 13 Tech Pillars, 10-Year Pilot

HVCF’s mandate covers 13 priority sectors aligned with Hanoi’s long-term development strategy. Officials have highlighted education, biomedical science, healthcare, transportation, smart urban development and advanced science and technology fields as core focus areas. 

Key design elements include:

• Pilot duration: up to 10 years, with a mid-term review after five years and a final evaluation at the end of the cycle.
• Investment scope: high-tech enterprises, science and technology companies, and innovative startups, particularly those commercializing research outputs. 
• Objective: not just financial returns, but to promote commercialization of science and technology and build momentum for the city’s innovation ecosystem.

If successful, HVCF is expected to become a template for other provincial funds set up under Vietnam’s new venture capital regulations, which encourage market-oriented state participation with controlled risk-taking. 

Private Capital Is Already Signalling Interest

The fund’s structure has drawn early support from local tech leaders:

• CMC Vice Chairman Lê Thanh Sơn cited the group’s strong returns from early investments like CMC Telecom and said CMC is ready to participate in HVCF to advance science and innovation goals.
• Elcom Vice Chairman Nguyễn Đức Thiện referenced past gains from investing in VinaGame and pledged at least a 5% stake in HVCF to back high-tech and smart-city projects.

From the VC side, VinaCapital Ventures’ Hoàng Đức Chung called Hanoi’s attempt to build a venture vehicle aligned with international norms a “rare opportunity,” but also stressed the need to clearly explain the 49% state cap and risk-sharing mechanism to potential investors.

Hanoi has also made its position clear: the city is prepared to contribute up to 49% of the fund’s capital—an amount Vice Chairman Trương Việt Dũng called higher than the typical comfort level for public investment. However, he stressed that the fund will not bring in partners who lack capability or are focused only on quick returns. The priority, he said, is to work with investors who share the long-term vision of building an internationally credible venture fund that can influence the market, rather than just another financial vehicle.

Part of a Bigger Bet: Labs, Talent and “First-Customer” Demand

HVCF is only one piece of Hanoi’s wider technology and innovation strategy.

Recent announcements include plans to: 

• Allocate 4% of the city’s annual budget to science, technology and innovation from 2026—roughly US$340 million a year.
• Build three mega-scale, international-standard laboratories in fields like energy–environment and life sciences, under a “three-party” model connecting universities, enterprises and the city.
• Train 1,000 PhDs and 50,000 digital workers, targeting the human-capital side of the tech ecosystem.
• Act as a “first customer” for startup products—using public procurement to buy solutions like medical screening kits or smart-city tools and help young companies validate and scale.

It echoes what other innovation hubs have done. Singapore’s SEEDS Capital, for example, uses government money to co-invest in deep-tech startups and has catalysed more than S$1.12 billion in additional private funds. Hong Kong’s Innovation and Technology Venture Fund follows a co-investment approach at roughly a 1:2 government-to-private ratio to bring more VC into local I&T startups. 

Hanoi appears to be crafting its own version of this playbook, tailored to Vietnam’s legal framework and capital markets, with HVCF as the flagship vehicle at city level.

A Test Case for Vietnam’s New Venture-Capital Mindset

Experts such as former Science and Technology Minister Nguyễn Quân argue that without sophisticated venture capital mechanisms, Vietnam will find it hard to build large-scale tech companies or breakthrough products. The recent Law on Science, Technology and Innovation and related decrees now give local governments a clearer legal basis to set up VC funds, accept measured losses and operate on market principles. 

HVCF is one of the first concrete tests of this new mindset:

• If it deploys capital wisely, crowds in private investors and supports credible high-tech winners, it could de-risk the concept of state-backed VC in Vietnam and unlock much larger follow-on funds.
• If it becomes slow, overly risk-averse or politically driven, it risks reinforcing old stereotypes about state capital and could discourage the very private investors it hopes to attract.
  

For now, Hanoi is saying the right things: shared risk, market principles, professional fund management, and a clear focus on technology sectors that can move the needle on growth, from smart cities and healthcare to education and biomedicine.

US$24 Million Is Small—But the Experiment Isn’t

In pure dollar terms, US$24 million is modest compared to regional venture markets. A single growth-stage round in Singapore or Bangalore can exceed that. But the strategic value of the Hanoi Venture Capital Fund lies less in its initial size and more in what it represents:

• A visible shift from “capital preservation” toward controlled risk-taking in innovation
• A co-investment signal to domestic and foreign investors that the city is prepared to share risk
• A platform to connect labs, universities, startups and corporates with real capital and real customers

If HVCF can prove that a city-backed, minority-state VC fund can operate with professional discipline and produce both returns and visible innovation outcomes, it could become a playbook for other provinces and even the national venture fund to follow.

Quick Summary

• Hanoi is launching its first venture capital fund, the Hanoi Venture Capital Fund (HVCF), on December 22, seeded with US$24 million in public capital.
• The fund uses a public–private model with state ownership capped at 49% to attract private investors and ensure market-driven governance.
• Designed under a non-legal-entity BCC structure, the fund aims for flexibility, fast decisions and professional VC management.
• HVCF will target 13 priority sectors, including deep tech, biomedicine, smart cities, education and advanced science.
• Industry leaders like CMC and Elcom have expressed interest in joining as early investors.
• The fund aims to close Hanoi’s early-stage capital gap, helping startups cross the “valley of death.”
• It is part of Hanoi’s broader strategy to expand R&D, create shared innovation spaces, build large-scale labs, and train 1,000 PhDs + 50,000 digital workers.