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  • 14/06/2023

Leading into Panel #3 “Opportunities and challenges of SIBs when raising financial capital” at the seminar "Connect and Develop the SIB ecosystem in Vietnam", Ms. Nguyen Lan Anh - Operations Manager, Department of Development and Strategic Initiatives, Fulbright University Vietnam raised the question: What sources are you raising capital from? What is your fundraising strategy?

The panel also had the participation of speakers: Ms. Thach Thi Chal Thi - Co-Founder Sokfarm; Ms. Dang Thi Truong An - CEO Hoa Nang Organic; Mr. Huynh Hanh Phuc - CEO, Founder of Green Connect; Mr. Nguyen Phan Anh Quoc - Representative of BlockTree.


How does SIB raise capital?


As a rice business, Ms. Truong An said that for small businesses, especially in agriculture, terms such as "capital structure", "capital planning" are still very far away. This will be a barrier for small businesses to access investors. With a lot of experience in raising capital, Ms. Truong An shared: If I have the orientation from the beginning, the process of approaching investors will be easier and investors will have more sympathy. Recently, Hoa Nang Organic is also the unit that successfully called for more than 4 billion VND from the Shark Tank Vietnam program.

Ms.Thach Thi Chal Thi - Co-Founder Sokfarm

As an agricultural unit, Sokfarm is currently mobilizing its own capital mainly and partly from bank loans. When the business is profitable, it will continue to reinvest. Every business will be different, some technology companies can have very fast developments in financial models, but for agricultural companies that are bold and depend on human identity, this problem takes more time.

Mr. Nguyen Phan Anh Quoc - Representative of BlockTree

With BlockTree (a platform connecting planters and donors, using Blockchain technology to authenticate reforestation through NFT), Anh Anh said that BlockTree has received an investment of $70,000 from a blockchain-based decentralized fund (nobody decides to invest but votes based on the community's set of criteria), but BlockTree is also in the stage of scaling up for sustainability.

Mr. Huynh Hanh Phuc - CEO, Founder of Green Connect

Mr. Huynh Hanh Phuc also shared about the capital structure of Green Connect: currently, there are 36 small investors (with a capital of 50-600 million) accounting for 7% of the stakes, the founder accounts for 91%, the remaining 2% is divided among team members, in addition, there is a loan of more than 2 billion from 5 people. With the business of agricultural products, Green Connect also applies the method of advance payment before customers buy services for the whole year, helping businesses to have a source of investment capital for logistics, software, HR... Anh Phuc also supposed that crowdfunding is very important in the first stage, but from the later stage, investors and investment funds are needed to accompany.

SIB representatives shared about 4 ways to raise capital in the panel:

1. Own capital, borrowed from family

2. Apply for investment from funds

3. Bank loans. However, the speakers all said that accessing bank loans is not easy for SIB, especially in the agricultural sector.

4. Mobilizing the community, participating in competitions


Experiences when receiving investment


Investors do not disburse once, but they will follow up milestones, and each milestone SIB needs to report back to disburse the next installment. Experience is that businesses need to pay attention in reporting transparency because investors have the right to supervise and monitor, as long as they detect fraud in the report, they will stop investing for them - Mr. Anh Quoc said.

With Sokfarm, the founder does not have a background in finance, so financial management is still quite difficult. However, according to Ms. Chal Thi, raising capital for her is not only about money, it is also about professional support, knowledge, cooperation, and she is very fortunate to have the guidance of experts when participating in different projects.

Ms. Dang Thi Truong An - CEO Hoa Nang Organic

About Ms. An's experience of working with investors: “There is always resistance and push. I always think about how to use money effectively: profit, revenue and the effects I bring to them. The obstacle is that we need to reconcile the wishes of investors and the strength of the business, and also pay attention not to draw an attractive cake that is too big compared to the strength.”


When can businesses be ready to raise capital and what do they need to prepare to receive investment?


The speakers all agreed that there is no common formula in calling for capital, but this depends on the development strategy of the business. To Ms. Thi: Each business will have a different model, when Sokfarm consults with consultants, Sokfarm receives questions such as: What do businesses need money for? and advice when reaching 100 billion to call capital. The milestone of 100 billion here means that I have completed the development process and internal resources, so that when investors invest, I will know how to use the cash flow.

With experience from Hoa Nang, Ms. An shared: issues such as financial statements are just the basics. Business strategy and how you use cash flow are the prerequisites that investors care about. SIBs also need to carefully study investors to determine if the two parties are compatible, SIB’s scale and features are suitable for investors, thereby saving connection time.

The seminar "Connecting and Building an Ecosystem to Support SIBs in Vietnam" is an activity within the framework of the project ISEE- COVID, sponsored by the Department of Global Affairs Canada (GAC), co-implemented by the United Nations Development Program (UNDP) and the Department of Business Development (AED). The seminar program is co-organized by CSIP and Fulbright University.

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