Vietnams low-tech agriculture startups fail to interest investors

A trader checks litchi fruits before getting them ready for exporting. Photo by VnExpress/Quy Doan

Failure to incorporate market needs and hi-tech elements into their projects is costing Vietnam’s agriculture startups dear, experts say.

Experts and other participants at the opening ceremony of the Saigon Times Startup Club recently agreed Vietnam comes up short on agricultural startups that appeal to investors.

“Previous capital investment reports show that funds for agriculture only account for 10 percent (of total investment),” Nguyen Viet Duc, CEO of Innovation Capital Management, said.

Explaining some of the reasons for this low investment rate, Duc said young startup companies do not satisfy the market demand and fail to factor artificial intelligence (AI) and Internet of Things (IoT) in their operations.

Taking this analysis further, Hoang Minh Ngoc Hai, general director of Value Commerce Hub, a startup facilitator and business consultancy firm, said not many Vietnam agricultural start-up companies were attractive to Japanese investors since they only want to fund companies that carry the promise of stable output, have more than one founder, and have founders with long-term commitment.

"We do not have many startups that meet all these factors," Hai said.

Commenting on the fact that there are fewer successful projects in the sector, General Director of Dong A Solutions, Tran Bang Viet, said that agricultural startups face more challenges than those in other sectors.

“Launching an agriculture startup is tough, time consuming, expensive and very complicated,” he said. “Not to mention quality products getting mixed up with bad and fake ones. The money that has to be spent on gaining customers’ trust is very high,” he said.

However, Viet also felt that agriculture, education and health are promising sectors for startups, because there are longstanding problems that can be tackled with innovative solutions.

Prime Minister Nguyen Xuan Phuc last month called for a drastic reduction in administrative procedures and easier access to agricultural loans.

Phuc said he wanted Vietnam to be listed among the top 10 countries in agricultural production and for the nation’s agriculture sector to rank 15th in the world.

Vietnam is currently ranked second in Southeast Asia and 13th in the world in agriculture production, according to Minister of Agriculture and Rural Development, Nguyen Xuan Cuong.

Vietnam exported about $36.37 billion worth of agriculture and fisheries products last year.