Over the last few years, many startups have proven themselves to be icons of excellence, showing unprecedented growth and profits. Seeing such massive success, many followed in their footsteps. Unfortunately, 2019 was not a very kind year for the global economy. As Vietnamese startups are heading into 2020, they are also looking to avoid the mistakes of other companies such as Uber and WeWork.
After witnessing the spectacular crashes of foreign startups, local investors and entrepreneurs are taking a more critical look at their businesses. For years, investors were willing to back losing businesses to gain market share. But with the devastating performances of some companies in 2019, there is now more scrutiny of new investments.
Some of the precautionary measures being taken now include setting benchmarks and increased founder scrutiny.
An example includes the Vietnam Innovative Startup Accelerator (VIISA), which requires its technology startups to meet a list of benchmarks throughout their time in the program.
“Apart from very intuitive selection criteria that all applying startups have to go through, the program has introduced a new development measurement method, which helps us to capture the progress of startups that are accepted into VIISA,” Hieu Vo, a board member and chief financial officer at VIISA, said. “I think this process will bring out the best in each person for the particular business they have founded and committed to.”
Additionally, the founder as an individual has become a point of scrutiny for investors as well. Investors used to be more forgiving of eccentric or aggressive founders, who were also seen as a part of the package of having a tech genius head an innovative business. Unfortunately, sentiments have shifted and investors now believe that too much permissiveness can damage a business.
It helps to not just think short term and to have an outside perspective, according to Pham Manh Ha, founder and chief executive officer of Beekrowd, an investment platform in Ho Chi Minh City.
“As a first-time founder, it seems impossible for us to look beyond the first six months to a year of our business,” he said, adding that experienced third parties can help businesses take the long view. “They stand outside the trees that are blocking us from seeing the forest.”
Vietnam has soon a huge boom in the startup sector over the years as investors are racing to put their money to use in taking advantage of the nation’s fast growth. It is unlikely that said growth will slow down anytime soon, but investors will now definitely be making their choices more carefully.