Learn about investing in innovative small and medium-sized startups

Article overview

Creative small and medium-sized startups play an important role in the economy, especially in generating innovative ideas and creative solutions. These businesses are often able to adapt quickly to the market and consumer needs, but also face many challenges in raising capital, financial management and sustainable development.

Investing in innovative small and medium-sized startups
Investing in innovative small and medium-sized startups

How to understand investment in innovative small and medium-sized startups?

According to the provisions of Clause 1, Article 3 Decree 38/2018/ND-CP, creative start-up investment is when investors invest capital to carry out business activities through contributing capital to establish, buying shares, and capital contributions of small and medium-sized creative start-up enterprises.

In other words, this is a form of investment in small and medium-sized enterprises that have new, creative business ideas and high growth potential but are in the early stages of development and need capital to expand scale.

Investment forms and methods for innovative small and medium-sized startups

Article 23 of Decree 38/2018/ND-CP clearly stipulates forms and methods of innovative startup investment, including:

Through innovative startup investment fund: These funds will evaluate and propose plans to select businesses, send them to state financial institutions for consideration, and decide to invest together.

Directly from state financial institutions:

  • If the local state financial institution operates under the state-owned enterprise model, it shall comply with Article 28 and Article 30 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.
  • If a local state financial institution operates under the model of an off-budget state financial fund, it must comply with regulations on the organization and operation of that fund and the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

Note:

  • The investment decision of the innovative startup investment fund from the fund’s capital does not depend on the investment decision of the local state financial institution.
  • Investment capital from a local state financial institution for an enterprise must not exceed 30% of the total investment capital that that enterprise mobilizes from co-invested creative start-up investment funds.
Innovative investment methods for small and medium-sized startups
Innovative investment methods for small and medium-sized startups

Conditions for choosing a creative startup investment fund and investing together

To be selected to co-invest with a local state financial institution, an innovative startup investment fund must meet the following conditions in Article 21 of Decree 38/2018/ND-CP:

  • Committed to working with state financial institutions to invest in innovative small and medium-sized startups.
  • Have at least 1 year of experience in creative startup investment activities.
  • Be able to cover your own expenses when investing.

Other conditions (if any).

What conditions must the investment recipient meet?

Not all innovative small and medium-sized startups are eligible to receive investment from state financial institutions. To receive capital, businesses need to meet the following criteria:

  • Operating in priority areas for local development.
  • Be selected for investment by at least one innovative startup investment fund.

The list of enterprises receiving investment is updated and published quarterly by state financial institutions on the electronic information portal of the organization and the Provincial People’s Committee.

Consulting services and investment support for innovative small and medium-sized startups

To make the investment process go smoothly and bring profits, investors can use Long Phan’s consulting services. Our Services include:

  • Consulting on effective investment forms and methods;
  • Consulting on investment conditions for innovative small and medium-sized startups;
  • Consulting on the benefits of investing in small and medium enterprises;
  • Consulting on risks when investing in small and medium-sized enterprises, offering remedial measures for effective investment;
  • Draft and review investment contracts, capital contribution agreements, company charter;
  • Support negotiations between investors and businesses;
  • Consulting on intellectual property and technology transfer during the investment process;
  • Consulting on resolving investment disputes (if any).
Investment consulting for innovative small and medium-sized startups
Investment consulting for innovative small and medium-sized startups

Investing in innovative small and medium-sized startups is a potential but also challenging field. Customers need to carefully learn about investment forms, criteria for selecting investment funds and investment enterprises. Besides, using professional consulting services will help customers minimize risks, optimize benefits and invest effectively. For detailed advice, please contact the hotline: 0906735386.