The Role of Investors in Developing the Innovation Startup Ecosystem.

The seminar titled “Connecting the Innovation Startup Ecosystem Network in the Southeast Region”, part of the Techfest DongNai 2021 event series, took place at 1:00 PM on November 24, 2021.

At the seminar, experts and speakers shared their experiences and approaches to connecting organizations and individuals that support innovation startups, fostering an innovative mindset within each individual to promote the development of the innovation ecosystem in the Southeast region, and turning it into a driving force for socio-economic development in the area.

Dr. Nguyễn Văn Tân – Member of the National Innovation Startup Advisory Council, Dean of FBAIE, and Head of the Entrepreneurship Department at Lac Hong University – paid special attention to investors and their role in developing the innovation startup ecosystem.

Through presenting and analyzing the components of the startup ecosystem, types of startup investment capital, stages of startup project development, and the role of investors in ecosystem growth, Dr. Nguyễn Văn Tân also highlighted important considerations for startups when approaching investors.

He proposed several key points that both the startup ecosystem and startup projects should pay attention to in order to enhance investment effectiveness:

Key Considerations Regarding Investors:

• Investors determine the value of a startup project based on five main factors, including:

  • The project’s management and operational capacity

  • The scale of the opportunity

  • The technological nature of the product or service

  • Effective marketing and sales channels

  • A low-competition environment

  Specifically, investors look at the ability to attract a certain number of customers/users, the startup founder’s reputation, the existence of a prototype, expected revenue potential, market supply-demand conditions, strong distribution channels, and the attractiveness of the industry.

  Investors generally rate startup projects poorly when they fail to meet six core criteria.

• Investors highly value startup projects based on seven key factors, such as:

  • Operating in a slow-growing or high-risk industry, or a declining industry

  • Low profit margins

  • High competition

  • Limited market gaps to exploit

  • Lack of managerial reputation

  • Unattractive and easily replicated products

  • Financial distress or cash shortages

  Investors typically use four main methods to evaluate startup valuation.

Dr. Nguyễn Văn Tân emphasized that to achieve more sustainable results in building the startup ecosystem in Dong Nai Province in particular and the Southeast region in general, relevant authorities should promote the formation of a local innovation startup mentor network. This network would connect ecosystem components and support startup projects, including assistance in accessing investment capital.