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Let’s open the 100 million dollar door

Interview with Youth newspaper
Hochiminh City, 13th November 2004
Interview with Nguyen Bao Hoang, Managing General Partner of IDG Ventures Vietnam

“You’ve just come up with a unique business idea but you don’t know how to turn it into reality? Think of IDG Ventures Vietnam,” Managing General Partner Nguyen Bao Hoang – who is managing the US$100 million fund to invest in Vietnamese businesses – speaks’.

Before IDG Ventures, there have been some well-known foreign investment funds present in Vietnam’s financial market. How IDG Ventures Vietnam’s investing strategy going to be any different?

The biggest difference is that we are focusing on high-tech and high growth-potential industries such as IT, e-Commerce, Telecommunications, and Biotechnology. These are the sectors that IDG’s global venture funds have years of experiences and deep knowledge. We do not just simply provide our portfolio companies with capital, but we also provide market knowledge, management skills, marketing skills, and help it find partners, customers, and strategic alliances.

We will sit on a portfolio company’s Board of Directors as well as provide more direct active support and consulting in order to support the operations of the company, as well as to make sure that the company is moving in the right direction strategically. More importantly, we want all companies that receive IDG funding to reach a certain threshold of success and growth that will allow them to be listed on the stock market in Vietnam or other global exchange.

The foremost goal of venture funds is to invest in individuals with brilliant business ideas but lack the financial capability to start their businesses, or start-up companies with high-growth potentials. Do you think it will be difficult to find those kinds of projects in Vietnam?

I don’t think that it’ll be difficult to do this in Vietnam, because Vietnam is full of young, intelligent, and very energetic businessmen and businesswomen. However, I just want young businessmen and businesswomen think about IDG ventures Vietnam first when they need capital and help to grow their businesses.

During the last three months, is there any Vietnamese company that has come to you to “advertise” its project?

I have received many inquiries that come in on a daily basis. Nonetheless, I have to say that not all projects or business plans are appropriate for the scope of investment fund’s goal. We are currently in the process of completing the negotiations with two companies, and we will publicize our first investments in the next few months.

Private healthcare in Vietnam is still considered as a new field, but the potential for growth is quite high. You graduated as a medical doctor in the United States, so you must be concerned with investing in this field?

When an investor decides to go into the healthcare field, the final goal must still be creating a profitable business. But since health care is also a public good, the investor must also balance between profit and social responsibilities. It’s a fine balance, but in the end, if there is no margin, there is no mission.

In Vietnam, the government is the main provider for health care services. However, with the government’s limited budget and resources, it is hard for hospitals to provide good quality services for each and every person in Vietnam. Also, different people also have different needs and expectations for medical care. This presents an opportunity for private healthcare providers in Vietnam.

However, I think the government should first encourage the privatization of healthcare and support measures which will attract outside funds for upgrading infrastructure and improving the delivery and quality of service. I think IDG Ventures Vietnam’s opportunity to invest in private healthcare is quite large, but currently laws concerning this field are not yet adequate or clear enough.

How long do you think it will it take to invest all of the US$100 million fund?

It is hard to say, but it will certainly take several years to find appropriate investments that suit our criteria. Almost all Vietnamese companies are of small and medium size. Furthermore, There are regulations that limit equity ownership by foreign investors (less than 30%) which make follow-on investments difficult. However, I expect these laws to change over time and the government is aware of the need for change regarding regulations such as this. Ideally, I expect that IDG will invest all of our capital in 30-50 companies over the next 10 years, with the average size of each investment about US$2-3 million.

What is IDG’s assessment of risk in investing in Vietnam?

For many investors globally, Vietnam is still a market that is not yet fully understood. Because of that, many still associate higher than usual risks with investing here. Within IDG, we have evaluated that risk and have assessed the opportunities outweigh the threats significantly. We have confidence in the economic growth of Vietnam and its enormous potential. Patrick McGovern, our company’s Chairman, has a strong belief and confidence in Vietnam and that is why we are so excited about our future investments and activities here.

Nguyen Bao Hoang was born in 1973 in Saigon and moved to the United States with his family when he was 2. He went to Harvard University, where he received Harvard National Scholar scholarship. He also received Ford Undergraduate Research Fellow and graduated Magna cum Laude in Classical Studies in 1995. After his graduation from Harvard, Mr. Nguyen went on to obtain his doctoral degree in medicine and master degree in business administration at Northwestern University and Kellogg School of Management. Before joining IDG Ventures Vietnam, he was the Managing Director for VITC in Asia, an American telecom company that operates in Asia.