More than 110,000 enterprises were set up in Vietnam in 2016, according to statistics from the Ministry of Planning and Investment, and Da Nang’s contribution to this record number of new establishments so far is clearly considerable. Start-ups in Da Nang have benefited from investment and support of the local authority through the Startup Network Coordinating Council, and from support services provided by local incubators and coworking spaces. Nevertheless, overall, there exists a gap still in the ecosystem of Da Nang and those of its peer cities Ha Noi and Ho Chi Minh City. That leads to a question for Da Nang’s start-ups: what should they do to succeed as well as to benefit these supports at a maximum?
Focusing on local advantages, solving local problems
Da Nang has emphasized its priority to develop the service sector, in which tourism is one of the few spearheads, with a significant contribution to the local economy expectedly at 60% of GDP by 2020. Taking into account that it will take quite a while for the local economy to reach a diversity like in Ha Noi and Ho Chi Minh City, Ms. Tu Thu Hien, Country Manager of MBI Vietnam advised that start-ups in Da Nang could pay attention to tourism related businesses. If they are able to find a niche and take advantage of the small size of the market, the chance of success will increase.
“In start-ups there is a concept called quick failure. With small sized markets, your pilot of new products/new business ideas will be quicker, thus, if proven unsuccesful, you can switch to new solutions with less time costs.” she said.
A painful fact known to all startups is that only around 1% of startups can succeed, while the rest fail. And among that tiny 1%, few can expand to the global market and make profit. Staying profitable abroad is not simple, even for big firms becauses of differences in culture, markets and networks. However, for business models in tourism, it seems that the door to the global market is not closed. According to Ms. Ngo Hong Diep, MBI expert in Vietnam, once a startup successfully solve a local tourism problem, they can consider replicate that solution in other tourism hubs facing the same issue.
“For example, tourism is affected by environmental factors. There are similar issues faced by Da Nang and other tourism cities. If a startup can solve an environmental problem in Da Nang, then the market of this solution is not just Da Nang,” said Ms. Diep.
Taking advantage of support provided by start-up support programs
Entrepreneurship and startups are being cherished in Vietnam, illustrated by the emergence of new startup funds and startup support programs. According to MBI experts, startups should fully make use of every support provided by these funds and programs, especially in having good communication for their businesses. It is because besides getting coached, knowledge and accessing capital, it is important for startups to be known, so that they can sell products and get attention of investors.
For startups in the tourism industry, it is worth mentioning MIST – the Mekong Initiative for Startup Tourism, a competition for tourism startups initiated by MBI and the Mekong Tourism Coordinating Office (MTCO). From early 2017, MIST will receive proposals from startups and will organize a regional level competition to select best tourism solutions. All participating startups will be coached before competing, as such, whether winning or not, they can all learn from success stories and failure lessons from all over the world, let a lone the chance to meet up angel investors.
“I can see numerous learing and sharing opportunies from various support programs. However, a chance to present projects and business plans before country leaders and international guests at the APEC Investment Forum 2017 in Da Nang and at the Mekong Tourism Forum 2017 in Laos is obviously something not easily provided by any institution,” said Mr. Jason Lust, editor in chief of Dulichable, an online magazine on tourism marketing and hotels in Vietnam.
Utilizing knowledge and insight; starting from solving problems encountered locally; taking advantage of development opportunities and maximizing supports to succeed and later expand to the world market – these are the directions for startups not only in Da Nang, but also elsewhere in Vietnam. Let us recall a popular saying: think big and start small!
(*) Mekong Business Initiative (MBI)