A comparative analysis of startups financing in Vietnam
Main Article Content
Abstract
The purpose of this paper is to compare the potential and funding amount of startups financing in Vietnam during the period of 2010 – 2018. Probit regression is employed to clarify the differences in fundraising potential among some industries. In addition, linear regression is applied to investigate the capacity of startups financing. The finding shows that startups in financial technology (fintech) and e-commerce have advantages in raising capital. Furthermore, startups in service technology dominate the capacity of raising money. In addition, the study shows that the older of startups age, the higher potential and capacity of outside financing. The study attributes valuable results to both academic and practical fields. Entrepreneurs can, thus, seize opportunities successfully in new ventures.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Keywords
Startups financing, Industry, New technology-based firms
References
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Storey, D.J. and Wynarczyk, P. (1996), “The survival and non-survival of micro firms in the UK”, Review of Industrial Organization, Vol. 11 No. 2, pp. 211-229.
Timmons, J.A. and Bygrave, W.D. (1986), “Venture capital’s role in financing innovation for economic growth”, Journal of Business Venturing, Vol. 1 No. 2, pp. 161-176.
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Bates, T. (1990), “Entrepreneur human capital inputs and small business longevity”, Review of Economics and Statistics, Vol. 72 No. 4, pp. 551-559.
Baum, J.A., and Silverman, B.S. (2004), “Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups”, Journal of Business Venturing, Vol. 19 No. 3, pp. 411-436.
Beck, T., Demirgüç-Kunt, A. and Maksimovic, V. (2005), “Financial and legal constraints to growth: does firm size matter?”, The Journal of Finance, Vol. 60 No. 1, pp. 137-177.
Beck, T., Demirgüç-Kunt, A. and Maksimovic, V. (2006), “The influence of financial and legal institutions on firm size”, Journal of Banking & Finance, Vol. 30 No. 11, pp. 2995-3015.
Beck, T., Demirgüç-Kunt, A. and Maksimovic, V. (2008), “Financing patterns around the world: are small firms different?”, Journal of Financial Economics, Vol. 89 No. 3, pp. 467-487.
Berger, A.N. and Udell, G.F. (1998), “The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle”, Journal of Banking and Finance, Vol. 22 No. 6-8, pp. 613-673.
Carpenter, R.E. and Petersen, B.C. (2002), “Is the growth of small firms constrained by internal finance?”, Review of Economics and Statistics, Vol. 84 No. 2, pp. 298-309.
Chang, S.J. (2004), “Venture capital financing, strategic alliances, and the initial public offerings of Internet startups”, Journal of Business Venturing, Vol. 19 No. 5, pp. 721-741.
Clarysse, B., Bruneel, J. and Wright, M. (2011), “Explaining growth path of young technologybased firms: structuring resource portfolios in different competitive environments”, Strategic Entrepreneurship Journal, Vol. 5 No. 2, pp. 137-157.
Cohen, W.M. and Klepper, S. (1992), “The trade-off between firm size and diversity in the pursuit of technological progress”, Small Business Economics, Vol. 4, pp. 1-14.
Colombo, M.G. and Grilli, L. (2010), “On growth drivers of high-tech start-ups: exploring the role of founders’ human capital and venture capital”, Journal of Business Venturing, Vol. 25 No. 6, pp. 610-626.
Colombo, M., Mustar, P. and Wright, M. (2010), “Dynamics of science-based entrepreneurship”, The Journal of Technology Transfer, Vol. 35 No. 1, pp. 1-15.
Cressy, R. (1996), “Are business startups debt-rationed?”, Economic Journal, Vol. 106 No. 438, pp. 1253-1270.
De Haan, L., Kakes, J. (2011), “Momentum or contrarian investment strategies: evidence from Dutch institutional investors”, Journal of Banking & Finance, Vol. 35 No. 9, pp. 2245-2251.
Denis, D.J. (2004), “Entrepreneurial finance: an overview of the issues and evidence”, Journal of Corporate Finance, Vol. 10 No. 2, pp. 301–326.
Finney, D.J. (1952), Probit analysis: a statistical treatment of the sigmoid response curve, Cambridge University Press, Cambridge.
FinTech Weekly (2016), “Innovative finance ISA 2016: an overview”, available at: https://www.
fintechweekly.com/magazine/articles/innovative-finance-ISA-2016-an-overview (accessed July 6, 2019).
Haeussler, C., Harhoff, D. and Mueller, E. (2012), “To be financed or not… - The role of patents for venture capital-financing”, ZEW - Centre for European Economic Research Discussion Paper, Munich School of Management, Ludwig-Maximilians-Universität München, Munich, No. 09-003, available at: ftp://ftp.zew.de/pub/zew-docs/dp/dp09003.pdf (accessed June 8, 2019).
Hellmann, T. and Puri, M. (2000), “The interaction between product market and financing strategy: the role of venture capital”, The Review of Financial Studies, Vol. 13 No. 4, pp. 959-984.
Hustedde, R.J. and Pulver, G.C. (1992), “Factors affecting equity capital acquisition: the demand side”, Journal of Business Venturing, Vol. 7 No. 5, pp. 363-374.
Kaplan, S.N. and Strömberg, P. (2000), “How do venture capitalists choose investments”, Working Paper, University of Chicago, Vol. 121, pp. 55-93.
Le, T.P. and Nguyen, T.H. (2017), “Determinants of fundraising for Vietnamese startups”, International conference for young researchers in economics and business, ICYREB 2017, October 30th 2017, Da Nang, Vietnam, pp. 543-552.
Mason, C.M. and Harrison, R.T., 2000, “The size of the informal venture capital market in the United Kingdom”, Small Business Economics, Vol. 15 No. 2, pp. 137-148.
McKinsey and Company (2015), “FinTechnicolor: the new picture in finance”, available at:
https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20 insights/bracing%20for%20seven%20critical%20changes%20as%20fintech%20matures/ fintechnicolor-the-new-picture-in-finance.ashx (accessed July 8, 2019).
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Murray, G. (1994), “The second ‘equity gap’: exit problems for seed and early stage venture capitalists and their investee companies”, International Small Business Journal, Vol. 12 No. 4, pp. 59-76.
Nguyen, T.H. (2019), “World experience of financing capital for stapups, and some suggestions for Vietnam ”, Economy and Forcast Review, Vol. 32, pp. 91-95.
Ooghe, H., Manigart, S. and Fassin, Y. (1991), “Growth patterns of the European venture capital industry”, Journal of Business Venturing, Vol. 6 No. 6, pp. 381-404.
OECD (2006), The SME financing gap (Vol. I): theory and evidence, OECD Publishing.
Puri, M. and Zarutskie, R. (2012), “On the life cycle dynamics of venture capital and non-venture capital financed firms”, The Journal of Finance, Vol. 67 No. 6, pp. 2247-2293.
Rea, D.K., Leinen, M. and Janecek, T.R. (1985), “Geologic approach to the long-term history of atmospheric circulation”, Science, Vol. 227 No. 4688, pp. 721-725.
Skan, J., Dickerson, J. and Masood, S. (2015), “The future of fintech and banking: digitally disrupted or reimagined?”, available at: https://www.accenture.com/_acnmedia/Accenture/ Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_11/Accenture-FutureFintech-Banking.pdf#zoom=50 (accessed July 8, 2019).
SparkLabs (2016), “FinTech Industry Report 2016”, available at https://www.slideshare.net/ bernardmoon/fintech-industry-report-2016 (accessed February 3, 2019).
Stanworth, J., Gray, C. (1991), Bolton 20 years on, Paul Chapman, London.
Storey, D.J. (1994), Understanding the small business sector, Routledge, London.
Storey, D.J. and Wynarczyk, P. (1996), “The survival and non-survival of micro firms in the UK”, Review of Industrial Organization, Vol. 11 No. 2, pp. 211-229.
Timmons, J.A. and Bygrave, W.D. (1986), “Venture capital’s role in financing innovation for economic growth”, Journal of Business Venturing, Vol. 1 No. 2, pp. 161-176.
Tran, T.T.H. (2015), “Mobilizing capital for startups”, Working Paper in Startups National Conference, ISBN: 978-604-67-0811-7, Nguyen Tat Thanh University, Hochiminh city, Vietnam.
Viettonkin Consulting (2019), “Startup ecosystem in Vietnam, Report No. 001-19, Viettonkin consulting”, availabe at: https://www.viettonkin.com.vn/wp-content/uploads/2019/04/ Startup-report_compressed.pdf, (accessed July 8, 2019).
Yang, Z., Shi, Y. and Wang, B.(2015), “Search engine marketing, financing ability and firm performance in E-commerce”, Procedia Computer Science, Vol. 55, pp. 1106-1112.