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The startup landscape has undergone significant changes over the years, as highlighted by Mr. Phan Minh Tam, Chairman of STI Holdings. Speaking at the Scale Up Forum organized by Endeavor Vietnam, Mr. Tam shared his observations on the stark differences between past and present startup environments.
In the past, startups faced immense pressure to generate profits quickly or risk failure. However, the current generation of startups, particularly those emerging from 2015-2016 onwards, operate under a different paradigm. These new-age companies can sustain themselves for extended periods using investor capital, allowing them to envision and work on large-scale solutions without immediate profitability concerns.
This shift has created a new breed of entrepreneurs who can think big without the constant worry of day-to-day survival. However, Mr. Tam expresses some reservations about this trend. He emphasizes that the fundamental purpose of companies should be to generate revenue. Growth without profitability, he warns, can lead to significant losses.
The current startup funding environment is experiencing what industry experts term a "funding winter." According to the "Technology Investment and Innovation Report 2024" by Do Ventures, Vietnamese startups received a total investment of $529 million in 2023, a 17% decrease from the previous year. The number of deals also saw a slight decline of 9%, dropping to 122. Furthermore, Tracxn Technologies reports that Vietnam's tech startup ecosystem raised only $35.7 million in the first quarter of 2024, a 39% decrease compared to the same period in 2023.
Reflecting on the startup boom 7-8 years ago, Mr. Tam notes that it created significant cash flow both into and out of Vietnam. During that period, tech startups sought rapid growth at any cost, and capital was cheap. However, Mr. Tam had reservations even then, believing that companies must prioritize profitability.
Mr. Tam emphasizes the importance of liquidity. He points out that while companies like Amazon were given decades to operate at a loss, investors' patience has significantly shortened. He fears that when market sentiments shift, there might be an overreaction, with investors demanding profitability within 1-2 years or even immediately.
Drawing from his own experience starting in the early 1990s, Mr. Tam describes it as almost a "primordial" period for business in Vietnam. Without investors or funds, businesses had to focus on immediate profits. This short-term focus, he believes, contrasts with the long-term vision of later, more educated generations.
Mr. Tam observes that the newer generation of entrepreneurs, while highly skilled and intelligent, often lack the pressure that drives profitability. Those who learn to make money early are sometimes criticized for being too short-sighted. He believes that finding a balance between short-term profitability and long-term vision is crucial.
In conclusion, Mr. Tam sees this evolution as a process. He hopes that future generations will be able to balance both short-term and long-term perspectives. His goal is for newer generations to learn from the expensive lessons of the past, saving both time and money in their entrepreneurial journeys.
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Keyword: Startup funding
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Source: markettimes / 18-Feb-2025 / https://markettimes.vn/chu-tich-sti-holdings-ngay-xua-lam-phai-ra-lai-khong-la-chet-luon-con-startup-bay-gio-ve-duoc-nhung-bai-toan-lon-nhung-khong-phai-lo-ton-tai-77198.html
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