On July 21, 2025, the Government promulgated Decree No. 210/2025/ND-CP (“Decree 210”), amending and supplementing a number of articles of Decree No. 38/2018/ND-CP (“Decree 38”) on investment for small and medium-sized enterprises engaging in startup and innovation. This new Decree introduces significant changes to the conditions for establishment and operation of Startup and Innovation Investment Funds (“SIIFs”) with a view to unlocking capital sources for Vietnam’s innovation ecosystem. Specifically:
1. Permitting the use of intellectual property as capital contribution to establish an SIIF
In line with the Fund’s establishment objectives, in addition to traditional assets such as cash, gold, and land use rights, Decree 210 allows investors to contribute capital to an SIIF in the form of intellectual property rights, technology, and technical know-how.
In addition, whereas Decree 38 did not permit investors to use loan capital to contribute to the establishment of an SIIF, Decree 210 officially abolishes such prohibition. This enables investors to be more flexible in the process of capital contribution.
2. Expansion of SIIF activities
Compared to the previous regulations, the operational scope of SIIFs has been broadened. Specifically, in addition to depositing funds and investing in small and medium-sized startup and innovation enterprises (“Startup Enterprises”), Decree 210 permits SIIFs to invest in convertible investment instruments and share purchase rights in such enterprises.
+ Convertible investment instruments refer to financial instruments for providing capital to Startup Enterprises under investment contracts between the SIIF and the Startup Enterprise, containing terms allowing conversion into shares, contributed capital, or other forms of ownership, as predetermined in the investment contract (similar in nature to convertible bonds or convertible loans).
+ Share purchase rights refer to derivative investment instruments arising from investment contracts between the Startup Enterprise and the SIIF, granting the Fund the right to purchase new shares under predetermined conditions specified in the contract. Such share purchase rights may not be transferred to third parties.
These provisions represent a positive change, expanding the lawful operational scope for venture capital funds in Vietnam. If implemented in conjunction with detailed guidance and support from competent state authorities, this will contribute to promoting capital flows into the startup and innovation sector—one of the key drivers of modern economic growth.
3. Prohibition on securities investment by SIIFs
Investors of the Fund may establish or hire a management company to manage the SIIF. In the course of managing the Fund’s operations, the management company:
+ Must not use the Fund’s capital or assets to invest in the Fund itself;
+ Must not use the Fund’s capital or assets to provide commercial loans or guarantee any commercial loans;
+ Must not use the Fund’s capital or assets to invest in listed shares, registered-for-trading shares, bonds, or fund certificates under securities law;
+ Must not commit to profit returns in any fundraising documents or activities of the Fund.
4. SIIFs must have at least two members
Under Decree 38, the maximum number of investors in an SIIF was 30 persons, with no minimum requirement. However, given the collective nature of investment funds—joint capital contribution, joint investment, joint profit-sharing, and risk-sharing—Decree 210 supplements a provision requiring SIIFs to have at least two members.
For SIIFs that were lawfully established (having received valid establishment notification from a competent authority) prior to the effective date of Decree 210 and have only one member remaining, such funds may continue to operate (transitional provision).
Decree 210 takes effect as from September 15, 2025.
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