Vietnam 100 Impact Startup Mapping by phthtran

100 Vietnam impact startups mapping report Associate Prof. Dr. Truong Thi Nam Thang

Table of Contents Acknowledgements ..................................................................................................................................... 3 1. Introduction............................................................................................................................................. 4 2. Research methodology ........................................................................................................................... 5 2.1. Developing the Concept of Impact Startup .................................................................................... 5 2.2. Compiling a List of Businesses ......................................................................................................... 5 2.3. Data Collection ................................................................................................................................. 5 2.4. Mapping ............................................................................................................................................ 6 3. The Concept of Impact Startup .............................................................................................................. 6 4. Key Results............................................................................................................................................... 7 4.1 The Quantity and the Average Age of Impact Startups .................................................................. 7 4.2 The Density of Impact Startups ........................................................................................................ 8 4.3 The Goals and Missions of Impact Startups ..................................................................................... 8 5. Conclusion and Recommendation ......................................................................................................... 9

Acknowledgements The Map of 100 Impact Startups was made by Associate Professor Truong Thi Nam Thang, Director, CSIE, National Economics University. This report was published with technical assistance from Phung Thi Thu Trang, Nguyen Hong Van, and designed by Dinh Hoang Hong Son from Vietnam Institute for Innovation & Development (VID). We also received specialist input in developing the concept of impact startup from Phan Hoang Lan, Vu Mai Hao, UNDP Vietnam, and Dinh Anh Tuan, National Economics University. Above all, this report would not be completed without 155 impact startup representatives who participated and completed our questionnaire. The report was requested by UNDP Vietnam, Sincerely. Hanoi, December 16th 2020 Associate Prof. Dr. Truong Thi Nam Thang

1. Introduction Initially, the concept of impact startup was introduced to Vietnam through Project 844 (“Supporting National Innovative Startup Ecosystem to 2025” Project, through Decision 844/QDTTg/2016). Project 844 is managed by Ministry of Science and Technology and is also the first project to pave the way for Vietnam to embark on its journey of becoming a Startup Nation. From that point onwards, many other projects have been launched, such as Project 939 “Enhancing Opportunities for Women’s Enterprises” and Project 1665 "Supporting students to start their businesses to 2025". Furthermore, these activities were implemented widely and extensively in many local and regional areas. Up until 2000, approximately 3000 startups were established. In 2014, Vietnam adopted the definition of Social Enterprise (SE) into the Law on Enterprises, and within a year, this term was presented in the amended Civil Code as well. Moreover, in the 20162020 Social and Economic Development Plan (SEDP) the government classified sustainable development as a main priority and has showed firm commitment to United Nations Sustainable Development Goals (SDG) since 2018. Recently, on September 25 th 2020, the Prime Minister promulgated a resolution on sustainable development in which he stated: “Sustainable development is a constant demand throughout the country’s development process; (We need to) combine social development with economic development efficiently while protecting the environment as well as maintaining national security.” Following the year 2015, with the basic legal framework for social enterprise now in place, over 100 social enterprises has registered under the Law on Enterprises. According to Project 844’s Report, impact startups account for 5% to 10% the entirety of 3000 listed startups. The concept of impact startup has been used by organizations and startup ecosystems like UNDP Vietnam and Project 844. Impact startup can be understood as the incorporation between social innovative business models built on the basis of intellectual property, which the government has been promoting since 2016, and social enterprise models. As specified in 2016-2020 SEDP and 2021-2025 development strategy draft report from the documents of the upcoming thirteenth Communist Party National Congress, given the international and national circumstances beside the vision for 2035, 2021-2025 SEDP focuses on a swift and sustainable development, making human growth its prime concern aside the addition of development management and social management; utilize market mechanism to use social innovation and tech startups as pillars for solving controversial social and environmental issues, dealing with public organizations’ difficulties in supplying public service, and encouraging labor productivity. Thus, it is evident how impact startups can serve as a great tool in finding the solutions to these problems and subsequently help our country meets its strategic goals in terms of both economic and social development. However, there has been no prior definition to impact startup, even concepts like social enterprise and innovative startup also face notable lack of defining criteria. In consideration of how important impact startups are on the next stage of development, it is crucial that they place great

emphasis on sustainability. With that fulfilled, we will be able to pinpoint exactly where enterprises are located and what policies can be made or adjust to enhance their growth. The process of conceptualizing impact startup, compiling a list of 100 impact startups and locate them on the map of Vietnam is going to offer a comprehensive view on impact startup sector. This insight will provide new opportunities and different approaches to research as well as practice.

2. Research methodology 2.1. Developing the Concept of Impact Startup To develop the definition of impact startup, we conducted an extensive research on legal documents within the country, related notions in scientific articles, foreign policy documents, and reports from other institutions. Furthermore, we adopted the expert interview method using Delphi technique. It consisted of 3 rounds, in which 6 experts including 3 innovation-startup scientists, 2 policymakers and 1 lawmaker participated. For round 1 we had an open discussion on the topic of impact startup whereas the research team found 3 distinctive approaches to define what an impact startup is. These approaches were sent to the experts for further review in round 2. As for the final round, round 3, our team compiled their comments and modified the definition along with the criteria accordingly and then had them underwent evaluation for approval. 2.2. Compiling a List of Businesses The list of businesses that took part in this study comprises social enterprises, social impact businesses, and impact startups. Information about social enterprises and social impact businesses was obtained from the Interactive Map of Social Impact Businesses in Vietnam (iMap Vietnam via imapvietnam.org), Impact village – Techfest Vietnam 2020, and National Business Registration Portal. Information about impact startups was obtained from incubation programs, acceleration programs, social innovation solutions, innovation contests on environment and climate change. Incubation and acceleration programs include: Techfest Vietnam, VietChallenge, NEUrON (National Economics University), Creative idea Contest (CiC – Vietnam University in Ho Chi Minh City). Social innovation contests on environment and climate change are: Youth Co:lab Vietnam, VYSI Challenge, Impact Aim, En Xanh, iMap Choice. 2.3. Data Collection Our research team collected businesses primary data through online surveys. The respondents were social enterprises, social impact businesses, and impact startups from the list mentioned in 2.2. The study was carried out on 500 samples with 155 questionnaires inputted. After filtering out the answered questionnaires, 100 answers were retained and analyzed. The questionnaire was designed with 3 major parts: General information, Impact startup Characteristics Assessment, Social impact Characteristics Assessment.

Our procedure followed 2 steps: Step 1: Conducting a test to evaluate the accuracy of the survey; Step 2: Launching an official survey to identify impact startups. 2.4. Mapping The map was made through data processing using Microsoft Excel and visualized using Microsoft Power BI.

3. The Concept of Impact Startup Impact startup is a business established on the foundation of intellectual property, new business models, has potential to thrive, pursues to generate positive social impact as well as financial return. The definition and characteristics of an impact startup is described in table 1. Table 1. The characteristics and defining criteria of an impact startup No. 1

Characteristics Startup business

Startup business

Innovative businesses

Generates impact

Defining criteria operates for no longer than 5 years after receiving business registration certificate for the first time. Hasn’t started an initial public offering

References Law on Support for SMEs 2017

Ways to determine Year of Establishment Business registration certificate

Law on Self-reported Support for SMEs 2017 Established on the Law on Products and other foundation of intellectual Support for evidence property, technology and SMEs 2017 new business models Has the potential to thrive Law on Measurements on share Support for growth, market growth, SMEs 2017 customers, revenue, profit, and technology Has clear goals to tackle Law on Public announcements challenging social and Enterprises about mission and goals environmental issues 2020 Is driven to generate International What positive impact is positive and measurable sources generated? For whom? impact on targeted On what scale? In how people, the environment long? Where does it take and society as a whole place in?

4. Key Results 4.1 The Quantity and the Average Age of Impact Startups The majority of the 100 impact startups that participated are situated in Hanoi and Ho Chi Minh City. With 41 startups in Hanoi and 38 in Ho Chi Minh City while the remainder scatters around the country. 60% of businesses were established 1 to 2 years ago, 7% below 1 year, 20% have been running for 2 to 3 years, 13% from 3 to 5 years of establishment. Table 2. The Quantity and the Average Age of Impact Startups No

Province/ City

Quantity

Average Age (years)

Ba Ria – Vung Tau

1,50

Binh Phuoc

2,00

Đa Nang

1,50

Đak Lak

1,00

Ha Noi

2,05

Hai Duong

3,00

Hai Phong

2,00

Hoa Binh

1,00

Nghe An

1,33

Phu Yen

1,50

Ho Chi Minh

1,62

Thanh Hoa

1,00

Thua Thien – Hue

0,00

Vinh Long

5,00

Average age of 100 impact startups

1,78

The research team has categorized the listed cities/provinces into 3 groups based on the average age of impact startups (Illustrated in Figure 1): Group of cities/provinces that have impact startups within 1 to below 2 years of age: Hoa Binh, Thua Thien – Hue, Đak Lak, Thanh Hoa, Nghe An, Ba Rịa - Vung Tau, Đa Nang, Phu Yen, Ho Chi Minh City.

Group of cities/provinces that have impact startups within 2 to below 3 years of age: Binh Phuoc, Ha Noi, Hai Phong. Group of cities/provinces that have impact startups within 3 to below 5 years of age: Hai Duong, Vinh Long. 4.2 The Density of Impact Startups The impact startup density map (Figure 2) shows that Ho Chi Minh City and Ha Noi is the 2 most concentrated regions. 41 out of 100 impact startups are situated in Hanoi. As the capital of Vietnam, Hanoi serves as the center of political and administrative affairs with major influence on culture, education, the economy and foreign trade, this is a huge advantage for Hanoi to become a national center of innovation. In 2018, the Hanoi People’s Committee issued Decision no. 4665/ QD-UBND to carry out “Supporting Start-up Businesses in Hanoi to 2020” Project. Hanoi has been implementing new solutions to help mitigate negative effects on the environment, investment aids and create opportunities for local impact startups to grow. Therefore, there is no surprise that Hanoi has a high impact startup density. Ho Chi Minh City takes up 38% the entirety of impact startups. This is the leading region in making ground-breaking policies and diverse support activities for impact startups. From 2016, Ho Chi Minh City People’s Committee has issued Decision no. 4181/QD-UBND on Support Programs for SMEs and Decision no. 5342/QD-UBND on Cooperative Regulations to Support Impact Startups. Notably, in the 2020-2025 Plan, Ho Chi Minh City strive to give support to at least 10% impact startups which have the technology or products to solve social issues whilst a tenth of impact startup projects receive annual support from the SpeedUp program at minimum. Ho Chi Minh City is the first area to set a direct goal and policies to aid impact startups. 4.3 The Goals and Missions of Impact Startups 71% Impact startups claim to pursue both positive social impact and financial return. 23% prioritize maximizing gains and will try to create impact given that it’s profitable. 6% value social impact and might not be efficient in business operation. The research team categorized sustainable development goals of the studied businesses into 3 groups:

 Infrastructure: These are the startups that pursue: SDG 1 – No Poverty, SDG 6 – Clean Water

 

and Sanitation, SDG 7 – Affordable and Clean Energy, SDG 8 – Decent Work and Economic Growth, SDG 9 – Industry, Innovation and Infrastructure, SDG 11 – Sustainable Cities and Communities, SDG 12 – Responsible Consumption and Production. Standard of Living: SDG 3 – Good Health and Well-being, SDG 4 – Quality Education, SDG 10 – Reduced Inequality Environment and Nature: SDG 13 – Climate Action, SDG 15: Life on Land

Although many impact startups may be pursuing many goals simultaneously, this report only concerns their main goals. Statistics shows that 45% impact startups offer infrastructure including clean energy, 43% focus on improving living standards through healthcare and education. Only 12% impact startups have goals to tackle problems regarding the environment. During the grouping process, the research team has found that there are 2 major goals that most impact startups aim to achieve: Infrastructure and Standard of Living. Impact startups originate from Binh Phuoc, Đa Nang, Hai Duong, Hoa Binh, Nghe An, Phu Yen, Thanh Hoa, Thua Thien – Hue focuses on Infrastructure. Impact startups originate from Ba Rịa – Vung Tau, Đak Lak, Hai Phong, Ha Noi, Ho Chi Minh City focuses on finding solutions to improve local people’s Standard of Living.

5. Conclusion and Recommendation Information about impact startups can be obtained through incubation programs, acceleration programs, social innovation solutions, innovation contests on environment and climate change. It can clearly be seen that the majority of impact startups are positioned in Hanoi and Ho Chi Minh City with the average age of below 2 years (1.7 to be precise). Most impact startups pursue two goals at once. They focus on 2 SDG groups which are supplying people with adequate infrastructure and improving standard of living through proper healthcare and education. It’s easier to identify whether the enterprise is an impact startup or not if that enterprise is in possession of technology or uses technology instead of new business models. Since the definition of new business models is still vague and less tangible than technology. Growth measurement has only been planned internally without any external or market evidence to prove its validity unless the business has been going under operation for long enough. For these reasons, it cannot be affirmed that the definitions and criteria in this report are final and sufficient for establishing the concept of impact startup. As mentioned in the Introduction of the report, this is the very first study in Vietnam with aims to conceptualize and offer a comprehensive view on this field which will help tremendously in finding new approaches, research methods and practices. The focus of the Socio-Economic Development Strategy 2021-2030 according to document drafts of the upcoming thirteenth Communist Party National Congress is quick and sustainable development, relying on science and technology, social innovation and the digital economy. Because of that, impact startup will be of great help to achieve these goals. This business model makes use of the market, innovation, science and technology, and intellectual property; helps encourage labor productivity, creates many values, levitates our country position within international context and solves internal social and environmental issues. This is why we are in need of specific and specialized policies to enhance the growth of impact businesses.

Image 1: Average age of impact startups by provinces/cities

Image 2: Quantity of impact startups

Image 3: Bussiness objective of impact startups

Image 4: Main sustainable development goal of impact startups by provinces/cities

100 IMPACT STARTUPS IN VIETNAM

Made by Center of Social Innovation and Entrepreneurship – National Economic University Address: 207 Giai Phong, Đong Tam, Hai Ba Trung, Ha Noi. Phone: 02462538099 Email: csie@neu.edu.vn Website: csie.neu.edu.vn United Nations Development Programme in Vietnam (UNDP) Address: 304 Kim Ma, Ngọc Khanh, Ba Đinh, Ha Noi Phone: 02438257495 Email: registry.vn@undp.org Website: vn.undp.org Technical support Vietnam Institute of Innovation and Development (VID) Address: 176 Thai Ha, Trung Liet, Dong Da, Ha Noi Phone: 0912952435 Email: vid.vn.info@gmail.com