Decree 264/2025/NĐ-CP on the Establishment of the National VC Fund – A Major Turning Point for Vietnam’s Startup Ecosystem

Refer to the full Decree 264/2025/NĐ-CP here.

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As one of the organizations that actively contributed feedback to the Decree, ThinkZone is delighted to share this important update with Vietnam’s startup and VC community. In this article, we will analyze the significant implications of this Decree.

* Đọc bài phân tích bằng tiếng Việt tại đây.

1. Major Shift in Government’s Investment Mindset and Risk Management

First, the Vietnamese term for “venture capital” — đầu tư mạo hiểm — literally means “risk-taking investment,” reflecting a high-risk form of investment. Previously, this term was often associated with negative perceptions of risk, particularly when related to state capital. However, the appearance of the term “National Venture Capital Fund” in an official legal document marks a significant shift in the government’s policy mindset — from the principle of “capital preservation” to “market-oriented operation with controlled risk-taking.” (Clause 2, Article 5)

Notably, the Decree clearly specifies:

“The total losses arising from investment activities using charter capital in the overall investment portfolio during one investment cycle, as determined under the Fund’s investment strategy or plan, must not exceed a risk threshold of 50% of the Fund’s charter capital.” (Clause 4, Article 10)

This demonstrates the government’s openness to accepting calculated risks when investing in high-risk, innovative sectors, signaling a strong and long-term commitment to fostering tech startups and innovation-driven growth.

2. The National Venture Capital Fund Is Designed on Market Principles, Prioritizing Tech Investment

The national and provincial venture capital funds will be established and operated like enterprises, adhering to market principles.

Clause 3, Article 5 of the Decree states:

“Priority is given to investment in innovative startups and enterprises with high growth potential in the fields of high technology, digital technology, strategic technologies, technologies that promote knowledge transfer, green economy, circular economy, and sustainable development that create positive impacts on local and national economies, societies, and environments.”

Vietnam’s VC industry has long faced the “dilemma” — deep tech companies often struggle with long R&D cycles, limited short-term revenue potential, and lack of scalable business models. Because of these constraints, most Vietnamese VCs find it difficult to “nurture” such startups due to limited fund sizes and risk tolerance.

However, with the introduction of this national fund and its “patient capital,” Vietnam now has a mechanism to fill the funding gap between limited private VC capital and the large funding needs of deep-tech startups.

3. Public–Private Partnership Design

On the capital side, besides the VND 500 billion in state funding, the National Venture Capital Fund targets a minimum fund size of VND 2,000 billion within 5 years, leveraging both public and private capital from organizations and individuals. This structure allows private companies and investors to co-invest alongside the state, fulfilling both profit-driven and national development objectives.

On governance, the fund established under Decree 264/2025/NĐ-CP may hire professional management firms (including foreign companies) and operate under market mechanisms with lean, transparent structures to minimize bureaucracy.

On investment strategy, the fund can invest directly in startups or in partnership with private VC funds, serving as a “fund-of-funds.” This shows the fund’s readiness to collaborate with private VC fund managers, combining expertise and resources to support Vietnam’s tech startup ecosystem.

4. Nationwide Implementation, Not Just a Small-scale Pilot

From the outset, the Decree establishes a dual structure — national and provincial-level venture funds — creating a nationwide venture capital architecture that shares knowledge, governance frameworks, and adaptable models suited to local contexts, rather than a limited “pilot scheme.”

This demonstrates the government’s strong commitment to expanding venture capital activity and promoting innovation-driven entrepreneurship nationwide.

5. Strengthening Domestic Capital Sources to Boost Startup Growth and Reduce Dependence on Foreign VCs

By introducing the national venture capital model, Vietnam is taking a significant step toward catching up with regional public–private VC models seen in Singapore, Malaysia, and Indonesia. The establishment of this fund also serves as a “flagship initiative” to attract more domestic investors to participate in Vietnam’s tech startup ecosystem, expanding the base of local venture funding.

Through participation from corporations, professional managers, and co-investment or fund-of-funds models, Vietnam now possesses a “public–private hybrid VC mechanism” similar to regional peers — helping diversify capital sources, reduce dependency on foreign VCs, and minimize vulnerability during global downturns or “funding winter” cycles.

CONCLUSION

The issuance of Decree 264/2025/NĐ-CP marks a major policy transformation in how Vietnam perceives and utilizes state capital — embracing a more risk-tolerant, patient, and innovative approach, with aspirations to drive strong growth in the country’s science and technology sectors.

While practical implementation — including fund management selection, capital raising, and operation — will take time, this Decree represents a historic first step signaling the government’s determination to foster venture capital development and support Vietnam’s next generation of innovation.

Let’s keep watching this transformative journey unfold!