To better prepare our startups for Vietchallenge 2020, our Vietchallenge team invited Mr. Binh Tran, a general partner of 500 Startups Vietnam, to join us and share his investment philosophy as well as offer advice for startup founders in the context of the current economic challenge.
Investing early in the Vietnamese market through 500 Startups investment fund in 2015, Mr. Binh Tran shared that he was faced with a lot of resistance at first. Many questions were asked, one of the most common beings: “Why did you choose Vietnam?” He noted that although the Vietnamese startup ecosystem is still young, the country’s advantages in computer science, and human capital make it a promising one.
Moreover, Mr. Binh Tran also provided our startups with valuable feedback to help advance their businesses to the global market. For example, he noted the challenges for Vietnamese hardware-based startups and urged entrepreneurs to consider adding a software element to their brand. In addition, building a strong brand image is also essential for these businesses in order to avoid replication from China.
When considering different factors to invest in a startup, Binh said: “When we invest in a business, we look for someone that is built to win the market, to be number one, or to be able to dominate. They should have some kind of innovative technology that is hard to replicate.” Return on investment is among the greatest priorities while investing. For each dollar invested, investors hope to receive 3 dollars in return. However, businesses in their early stages ought to build up traction before they become attractive to investors. In the same vein, it is vital to have a small number of customers who truly love and trust the products in order to sustain the business in the long run.
During this challenging period, startups should concentrate on their structure and content. They have to maintain high-quality content and improve their scalability in order to provide suitable products to their customers. Given the current pandemic, Mr. Binh Tran advised that startups should make use of a platform to source creative, relevant ideas that can have the biggest impacts on their customers.
Lastly, Mr. Binh Tran expressed that competition might present startups with real challenges. Startups should dig deeper into the area of revenue where many businesses are willing to pay, as well as creating a network effect to attract customers by collecting and utilizing customer data. After building a customer base, startups should gather customers’ input and keep coming up with new ideas to keep their customers engaged.
In summary, Mr. Binh Tran emphasized two specific ways to avoid pitfalls in investment: Instead of releasing too many products at once, focusing on one product that makes customers fall in love with. Second, to make a successful startup, founders should strive to be creative as much as they can.