Vietnam’s startup ecosystem is on the rise, drawing the attention of investors and entrepreneurs globally. However, the road to success for any business requires a solid combination of five fundamental pieces that we will review in this article.
According to a recent report by Idea Lab, a renowned US venture building firm, the five critical success factors for new ventures are timing, team execution, the product, the business model, and funding. With over two decades of business experience in Asia and more than 15 years in Vietnam, CMG‘s leadership has played a key role in successful venture building in the region. Our team has analyzed this report and found it to be highly relevant in describing the current startup landscape in Southeast Asia and the factors that drive an early-stage company’s success.
Studies suggest timing accounts for 42% of a company’s success, and startups in fast-moving markets like Vietnam need to keep a close eye on emerging trends, changing consumer behaviors, and new technologies to identify the right time to launch their business.
The young population, fast tech adoption, and quickly emerging economy in Vietnam create a unique dynamic not seen in many other markets. Founders need to be mindful that it is usually only in hindsight that we can determine if the right thing was done at the right time, but that is the definition of success in business.
2. Team Execution
Team execution makes up 32% of the total success rate of a company. The execution capabilities of the founding team can easily determine the success or failure of a startup. Building a team with a diverse set of skills that complement each other, a strong work ethic, and a shared vision is critical for building a successful venture. It’s like putting together a band that can create music together. When you find the right people who are all masters of their craft it’s magic.
3. The product
The actual product accounts for 28% of the total success rate. Having a unique and innovative product that solves a real problem and meets the needs of the local market as it emerges into a more developed economy is key.
Each country has its own growth story with different socio-economic, cultural, and technological influences, and finding the right way to package and communicate your product or service to capture the hearts and minds of the next generation takes keen observation and great storytelling.
4. The business model
A sustainable and scalable monetization model is also necessary, accounting for 24% of the total success rate. Startups need to have a well-defined business model that can generate revenue, attract customers, and provide value to stakeholders. Most venture funds are looking for monetization much earlier and faster than when money was cheap and low-interest rates ruled the day.
Lastly, funding is essential for startups to finance their operations, hire talent, and scale their businesses. Although funding accounts for only 14% of the total success rate of a startup, it is still critical for startups to have access to capital to fuel their growth.
To succeed in Southeast Asia’s ever-changing market, entrepreneurs need to seek out experienced mentors and build a strong advisory board. These resources can provide valuable guidance, support, insights, and networking opportunities that can significantly increase the chances of success.
In summary, the startup scene in the region is filled with potential, but the key to success lies in the combination of funding, a strong founding team, a solid monetization strategy, a great product, and impeccable timing. With the right guidance and resources, startups in Vietnam and other countries can achieve the tremendous success that will continue to drive growth in the region. As Vietnam continues to emerge as a leading economy in Southeast Asia, the world is watching with great interest.