Hanoi is launching its first-ever venture capital fund on December 22, a strategic initiative to bolster the city's technology and innovation ecosystem. The Hanoi Venture Capital Fund (HVCF) will begin with VND600 billion (US$24 million) in public capital. It aims to direct investment toward deep-tech and smart-city startups through a novel public-private partnership.
A New Model for Public-Private Investment
A key feature of the HVCF is its public-private structure, which caps the city's contribution at 49% of the fund’s charter capital. This design prevents the state from holding a controlling stake, reassuring private investors that decisions will be market-driven. The model is intended to attract up to six strategic partners by ensuring capital is deployed on commercial terms.
The fund will operate under a Business Cooperation Contract (BCC), a contractual arrangement that forgoes creating a separate legal entity. This structure provides the speed and flexibility of private venture capital, minimizing bureaucratic hurdles common in state-owned enterprises. It also allows for a professional fund manager to adhere to global governance standards.
Bridging the Early-Stage Funding Gap
The HVCF was established to address a critical early-stage capital gap within Hanoi's startup scene. While the city has major universities and research institutes, high-potential fields like new materials and cell technologies remain underfunded. The fund will act as catalytic capital, de-risking investments to help innovative companies navigate their initial growth phases.
With a mandate covering 13 priority sectors, the fund will focus on areas aligned with Hanoi's long-term development goals. Key targets include education, biomedical science, smart transportation, and other advanced science and technology fields. The 10-year pilot program aims to accelerate the commercialization of scientific research alongside generating financial returns.
Garnering Support from Industry Leaders
The initiative has already garnered positive signals from the private sector, with prominent technology firms expressing their intent to participate. CMC Group and Elcom have both pledged support, citing their own successful track records with early-stage tech investments. Their commitment signals business community confidence in the fund's mission.
From the investment community, VinaCapital Ventures has described the fund as a rare opportunity aligned with international norms. However, experts also emphasize the need for clear communication regarding the state's minority stake and risk-sharing mechanisms. This transparency will be crucial for attracting capable and long-term strategic investors.
A Cornerstone of a Broader Innovation Strategy
This new fund is a central pillar in Hanoi's broader strategy to become a regional innovation hub. The city has announced ambitious plans to allocate 4% of its annual budget to science and technology by 2026. This commitment includes building large-scale laboratories and training thousands of skilled digital workers.
Further bolstering this ecosystem, Hanoi intends to act as a "first customer" for startups by using public procurement to adopt new technologies. This approach provides young companies with crucial validation and a pathway to scale their operations. The strategy mirrors successful government-led innovation programs seen in hubs like Singapore and Hong Kong.
While the HVCF's initial US$24 million capital is modest, its strategic importance is immense. The fund serves as a critical test case for a new, market-oriented mindset in Vietnam's public investment landscape. Its success could create a replicable model for other provinces, reshaping how the nation fosters high-tech innovation.