Can Foreign Investors Establish Startups in Vietnam?

In recent years, Vietnam’s startup ecosystem has gained increasing interest from foreign investors. However, many still wonder whether foreign investors can directly establish a startup in Vietnam, and whether it is mandatory to do so through a venture capital fund. This article will help clarify these questions based on current legal regulations.

1. What is a Startup Enterprise?

According to the Law on Supporting Small and Medium Enterprises 2017, a startup enterprise is defined as a business that:

• Is established to realize an idea based on the exploitation of intellectual property, technology, or a new business model;

• Has high growth potential; and

• Aims for innovation.

This is a special type of enterprise that often receives support from the government, venture capital funds, or startup accelerators.

2. Can Foreign Investors Directly Establish a Startup in Vietnam?

The answer is YES.

According to Article 19 of Decree No. 38/2018/NĐ-CP, foreign investors are not required to invest through a startup investment fund in order to establish a startup enterprise in Vietnam.

Foreign investors can:

• Directly contribute capital, purchase shares or equity to establish a startup enterprise;

• Participate in the management or operation of the business, provided they meet conditions under Vietnamese investment law and international treaties.

However, they must still comply with investment conditions and foreign ownership limitations as specified in Vietnam’s WTO Commitments, the Law on Investment 2020, and related legal documents.

3. Is It Mandatory to Invest Through a Startup Investment Fund?

According to Article 18 of Decree No. 38/2018/NĐ-CP, foreign investors are not required to go through a startup investment fund. Such funds are optional financial support channels, not a mandatory route for establishing startups.

In other words:

• Foreign investors may invest directly if they meet all legal requirements;

• There is no need for an intermediary such as a venture capital fund or startup investment fund.

4. Legal Considerations When Establishing a Startup in Vietnam

To establish a startup in Vietnam, foreign investors should pay attention to the following legal aspects:

• Check whether the intended business sector is subject to investment restrictions;

• Review the maximum foreign ownership percentage allowed by law;

• Complete investment registration procedures and apply for an Investment Registration Certificate (IRC) if required;

• Follow procedures to establish the company and obtain an Enterprise Registration Certificate (ERC);

• Ensure compliance with regulations on intellectual property, technology transfer, and profit remittance abroad.

5. Legal Consulting Services for Foreign Startup Investors in Vietnam

With extensive experience supporting startups and foreign investors in Vietnam, Dedica Law Firm offers comprehensive legal services, including:

• Advising on investment conditions and suitable business sectors;

• Preparing and drafting legal documents for company formation;

• Representing clients in dealings with Vietnamese authorities throughout the investment process;

• Providing ongoing legal support on IP protection, share transfers, and other post-investment legal matters.

Contact DEDICA Law Firm today for expert legal advice!

• Phone: (+84) 39 969 0012 (We are available on WhatsApp, WeChat and Zalo)

• Head Office: 144 Vo Van Tan Street, Vo Thi Sau Ward, District 3, Ho Chi Minh City, Vietnam

• Hours: Monday–Friday (8:30 am – 6:00 pm)

Call us now or leave us a message to get advice. Initial consultation is free of charge.