Foreign companies seeking to invest in startup programs in Vietnam are presented with many attractive opportunities while also facing legal requirements and cooperation models specific to the domestic market.
I. Introduction to issues related to foreign companies seeking to invest in startup programs
In the context of globalization and the strong wave of innovation, startup ecosystems have become an attractive destination for international investment capital. In Vietnam, together with the development of startups in technology, finance, education, healthcare, and digital transformation, the number and scale of foreign companies seeking to invest in startup programs have been increasing significantly.
1. Definition of foreign companies seeking to invest in startup programs
Foreign companies seeking to invest in startup programs may be understood as enterprises established and operating under foreign laws that perform or intend to perform capital contribution, share acquisition, financial investment, or resource support for startups through startup programs in Vietnam.
These programs may include startup incubators, startup accelerator programs, venture capital funds, or cooperative initiatives between large enterprises and startups.
A distinctive feature of such a group of companies is that they not only aim for short-term profits but also focus on technology development, market expansion, and building a sustainable innovation ecosystem.
2. Importance of foreign companies seeking to invest in startup programs
The participation of foreign companies seeking to invest in startup programs plays a particularly important role in the development of the domestic startup ecosystem.
- First, foreign investment capital helps startups solve the problem of financial resource shortages during the early stages of development.
- In addition, foreign companies also bring management experience, advanced technology, and international networking opportunities, contributing to improving the competitiveness of Vietnamese startups in regional and global markets.
At the same time, such investment activities also promote an innovative environment, creating momentum for policy reform and improving the legal framework to attract foreign investment into the startup sector effectively and sustainably.
II. Types of foreign companies seeking to invest in startup programs
First, the group of foreign venture capital funds. It is the most common type in startup investment activities, focusing on startups with high growth potential but also significant risks. These funds usually participate through capital contribution, share acquisition, or accompanying startup accelerator programs, providing not only capital but also strategic support, governance assistance, and international market connections.
Second is the group of multinational enterprises and corporations wishing to invest in startup programs as part of their open innovation strategy. These companies often implement incubation programs or cooperate with startups to seek new technological solutions, test innovative business models, or complement existing value chains. For such a group, the investment objective is not merely financial profit but also long-term strategic value.
Third is the group of financial institutions and foreign investment institutions, including banks, insurance companies, fund management companies, or development investment organizations. These entities usually participate in startup program investments more cautiously, prioritizing startups that have passed the idea stage and have relatively stable business models, in order to balance profitability and risk management.
In addition, there is also the group of startup support and innovation organizations with foreign elements, such as non-profit organizations, international business associations, or bilateral and multilateral cooperation programs. Such a group often acts as a connection between domestic startups and international investors by organizing training, mentoring, investment connections, and legal support, thereby contributing to building a sustainable foundation for the development of the startup ecosystem.
III. Legal basis for foreign companies seeking to invest in startup programs
First, the Law on Investment 2020, amended in 2025, serves as the fundamental legal document regulating market access sectors for foreign investors (Article 9), investment forms (Article 21), and cases and procedures for the issuance of Investment Registration Certificates (Articles 37 and 38), among others. Accordingly, capital contribution, share acquisition, or investment through startup programs must comply with regulations on market access conditions and corresponding investment procedures.
In addition, the Law on Enterprise 2020, amended in 2025, governs issues related to the legal status of enterprises such as enterprise registration (Article 26), foreign investors as capital-contributing members (Article 25), and other related matters.
Furthermore, depending on the startup’s business sector, foreign companies investing in startup programs may also benefit from support policies under laws such as the Law on Support for Small and Medium-Sized Enterprises 2017 and the Law on Science, Technology, and Innovation 2025.
The combination of these legal bases forms a comprehensive legal framework governing foreign investment activities within Vietnam’s startup ecosystem.
IV. Procedures for foreign companies seeking to invest in startup programs
Procedurally, the process for foreign companies seeking to invest in startup programs is usually implemented through specific steps, depending on the investment form and ownership ratio.
- First, foreign investors need to conduct legal due diligence on the startup or startup program intended for investment, including identifying business lines, market access conditions, and restrictions applicable to foreign investors.
- Next, in cases where capital contribution or share acquisition results in foreign investors holding an ownership ratio subject to registration requirements, the investee enterprise must implement registration procedures with the investment registration authority in accordance with Article 37 of the Law on Investment 2020, amended in 2025.
- After approval is obtained, the parties proceed to sign investment agreements, transfer capital, and update enterprise information with the business registration authority in accordance with Article 26 of the Law on Enterprise 2020, amended in 2025.
For cases of investment through investment funds or startup accelerator programs, the process may be simplified but must still ensure compliance with regulations on foreign exchange management, investment capital transfer, tax obligations, and investment reporting.
V. Questions related to foreign companies seeking to invest in startup programs
1. What conditions must foreign companies meet when seeking to invest in startup programs?
When a foreign company seeks to invest in startup programs, it must first satisfy market access conditions under Vietnamese investment law.
Specifically, foreign investors need to examine whether the startup’s business sector falls within the list of sectors with restricted market access and comply with conditions regarding ownership ratio, investment form, and scope of operation (if any).
In addition, investors must comply with regulations on foreign exchange management, investment capital transfer, tax obligations, and investment reporting in accordance with applicable laws.
2. What investment forms can foreign companies choose when investing in startup programs?
In practice, foreign companies seeking to invest in startup programs may choose various investment forms under Article 21 of the Law on Investment 2020, such as capital contribution, share acquisition, or capital contribution purchase in startups; investment through venture capital funds; or participation in incubation and startup accelerator programs as sponsors or strategic partners.
Each investment form has different legal characteristics and risk levels; thus, it should be carefully considered in accordance with the objectives and investment strategy of the foreign investor.
3. What legal risks should foreign companies pay attention to when investing in startup programs?
When foreign companies seek to invest in startup programs, one of the biggest legal risks arises from failing to meet market access conditions under investment law.
Pursuant to Article 9 of the Law on Investment 2020, as guided by Section 2, Chapter II of Decree No. 31/2021/ND-CP, foreign investors may only invest in sectors not included in the list of restricted market access sectors or must fully satisfy the investment conditions applicable to foreign investors. If violated, the investment transaction may not be recognized or may be required to be adjusted or terminated by decision of the competent authority.
In addition, legal risks also arise from failing to implement or improperly implementing registration procedures for capital contribution or share acquisition. Pursuant to Article 26 of the Law on Investment 2020, in certain cases, foreign companies must complete registration procedures with the investment registration authority before contributing capital or purchasing shares.
Failure to comply with this requirement may lead to administrative sanctions, mandatory remedial measures, or affect the investor’s legitimate rights and interests when disputes arise.
4. Is approval from local authorities required when foreign companies seek to invest in startup programs?
Whether foreign companies seeking to invest in startup programs need approval from state authorities depends on the investment form and ownership ratio.
In certain cases, foreign investors must implement investment registration procedures with the investment registration authority before making the investment in accordance with Article 38 of the Law on Investment 2020, amended in 2025, as amended by Clause 14, Article 6 of the Law amending the Law on Bidding; the Law on Investment under Public-Private Partnership; the Customs Law; the Law on Value Added Tax; the Law on Export and Import Duties; the Law on Investment; the Law on Public Investment; and the Law on Management and Use of Public Assets 2025.
It is not a “permission request” in the ordinary administrative sense, but rather a legal procedure for recording and managing investment activities in accordance with legal regulations.
5. If disputes arise when foreign companies seek to invest in startup programs, how will they be resolved?
When disputes arise relating to investment activities, foreign companies seeking to invest in startup programs may resolve them through negotiation, mediation, or formal dispute resolution methods such as arbitration or court proceedings.
In practice, many foreign investors prefer commercial arbitration due to its flexibility, confidentiality, and the enforceability of arbitral awards in many countries.
The choice of an appropriate dispute resolution mechanism is usually agreed upon by the parties from the investment contract negotiation stage.
VII. Do you need legal support for foreign companies seeking to invest in startup programs?
With the legal system becoming increasingly comprehensive yet equally complex, foreign companies seeking to invest in startup programs often require support from experienced legal professionals.
The assistance of a legal advisory firm not only helps investors fully assess risks and choose appropriate investment forms but also supports investment procedures, contract drafting, and dispute resolution.
In the context of competition and fluctuations in the startup market, specialized legal support is a crucial factor in ensuring that foreign investment activities are implemented effectively, safely, and sustainably.
The above information is for reference purposes only. Should you require detailed advice for your specific case, please contact NPLaw Firm for immediate consultation.
