Startup in israel and singapore outlook, stimulating factors, evaluation and recommendation for vietnam

BỘ NGOẠI GIAO HỌC VIỆN NGOẠI GIAO KHOA KINH TẾ QUỐC TẾ KHÓA LUẬN TỐT NGHIỆP BỘ NGOẠI GIAO HỌC VIỆN NGOẠI GIAO KHOA KINH TẾ QUỐC TẾ KHÓA LUẬN TỐT NGHIỆP Startup in Israel and Singapore outlook, stimula[.]

BỘ NGOẠI GIAO HỌC VIỆN NGOẠI GIAO KHOA KINH TẾ QUỐC TẾ KHÓA LUẬN TỐT NGHIỆP BỘ NGOẠI GIAO HỌC VIỆN NGOẠI GIAO KHOA KINH TẾ QUỐC TẾ KHÓA LUẬN TỐT NGHIỆP STARTUP IN ISRAEL AND SINGAPORE: OUTLOOK, STIMULATING FACTORS, EVALUATION AND RECOMMENDATION FOR VIETNAM Giáo viên hướng dẫn : PGS TS Đặng Hoàng Linh ACKNOWLEDGEMENT After four years of pursuing a bachelor degree majoring in International Economics at the Diplomatic Academy of Vietnam, I have chosen to base my research dissertation on the topic: “Startup in Israel and Singapore: Outlook, stimulating factors, evaluation and recommendation for Vietnam.” I would like to thank all of the professors and lecturers in the Faculty of International Economics, especially Dr Ngô Duy Ngọ and Dr Nguyễn Văn Lịch, who have guided me through the four years of my university journey It is their expertise on international economics as well as foreign affairs that have inspired and encouraged me to finish university with good results Therefore, this graduation thesis is not only an accomplishment achieved after years of obtaining valuable knowledge from all of my mentors, but it is also an indication of my gratitude towards them I would like to give my special thanks to Associate Professor, Dr Đặng Hoàng Linh for directly guiding me during this journey Thank you for your time, dedication as well as careful attention to details and persistent support and guidance throughout the process All of your feedback and discussions have truly enlightened and inspired me This thesis would never take form or be finished if it was not for your help Therefore, I would like to dedicate this research to you, as the biggest token of gratitude for all of your hard works and commitments Lastly, I would like to thank every lecturer in the Diplomatic Academy of Vietnam, the Student Affairs Department as well as my classmates who have supported me on all fronts during study and research process All of their dedications and contributions have helped me tremendously from the very first day until now Even at my best attempts, I believe this dissertation remains inevitably defective Thereby, I hope readers, whether it be lectures, colleagues, family, and friends or people concerned, would continue to help me complete the research Once again, I would like to express my sincere gratitude to everyone that has helped me as well as all of the readers TABLE OF CONTENT INTRODUCTION CHAPTER 1: THEORETIC BASIS .1 1.1 Theoretic definition of startup 1.2 Regulated definition 1.3 Stages of startups 1.4 Funding for startups CHAPTER 2: THE STARTUP OUTLOOK AND POLICIES IN ISRAEL AND SINGAPORE 13 2.1 Israel 13 2.1.1 Startup outlook in Israel 13 2.1.2 Stimulating factors 19 2.1.2.1 Government policies .19 2.1.2.2 Favorable conditions created by the private sector .25 2.1.3 Evaluation 29 2.2 Singapore 33 2.1.1 Startup outlook in Singapore 33 2.1.2 Stimulating factors 38 2.1.3.1 Government policies .38 2.1.3.2 Favorable conditions created by the private sector .45 2.1.3 Evaluation 48 CHAPTER 3: RECOMMENDATION FOR VIETNAM 53 3.1 The current situation in Vietnam 53 3.1.1 Vietnam’s outlook 53 3.1.2 Startup outlook 55 3.1.3 Stimulating factors 58 3.1.3.1 Government policies .58 3.1.3.2 Actions of the private sector 63 3.1.4 Existing problems .67 3.2 Recommendation for Vietnam 71 FINAL CONCLUSION REFERENCE INTRODUCTION There are approximately 305 million out of 472 million entrepreneurs in the world that are labeled “startups” This is a significant sign indicating the fact that the world has been swamped with startup companies Thus, startups have become the focal point of global economic development and each and every country is striving to build a more dynamic startup ecosystem for their own Among these, there is Israel and Singapore, said to be the two of the best fast-growing startup hubs in the world Knowing that Vietnam is unexceptionally participating in the startup race raged globally, it is important to understand the critical components to the success of leading nations in this field Accordingly, this thesis aims at enhancing its audience’s knowledge of startups in general as well as specific contributing factors to the success seen in Israel and Singapore In addition, the results and lessons helpful for policy-makers in Vietnam so as to further stimulate the startup environment in the country There are three main chapters in this thesis In chapter 1, we will zoom in on theoretic bases of “startup” as well as other related concepts so as to clarify the general idea of the main subject that is to be mentioned in the thesis In chapter 2, the thesis will attempt to study the cases of Israel and Singapore, two of the strongest representatives of startup creators in the world, to understand the core reasons behind the success of these nations, whether it be stimulating measures from the public or the private sector In chapter 3, the center point will be the close examination of Vietnam in regards to its general economic outlook and startup scene, as well as directed measures to further nourish the startup ecosystem Possible suggestions will be deduced from given factual information, either from exemplified countries or from problems existed within the nation, so as to enhance and improve the startup environment in Vietnam InnMind (2016), How many https://innmind.com/articles/262 startups are there in the world? (infographic) , The span of the research will be mainly placed in the last five years when startups became more popular worldwide However, earlier data may be provided so as to offer a comprehensive look at the general term as well as the startup scenes in the three examined countries: Israel, Singapore, and Vietnam CHAPTER 1: THEORETIC BASIS 1.1 Theoretic definition of startup Thanks to the booming economy, the internet, and the media, “startup” has become an increasingly ubiquitous term in the past years However, there has not a single flawless definition to be recognized universally for this overused term In this sector, we are looking back at how the word was first used, what it meant during each period and see it from different aspects and angles in order to understand the term more specifically The origin of the phrase rooted back four decades, when the term simply meant “building a new company” The term was first found in Forbes (1976): “The unfashionable business of investing in startups in the electronic data processing field” It was again included in an article in Business Week (1977): “An incubator for startup companies, especially in the fast-growth, hightechnology fields” Although the phrase appeared without much context or further indication of its meaning, nor was anyone sure if it was invented purely to avoid repetition of words, these early references to the word under the same topic, technology, has virtually made “startup” a signature phrase when depicting technology-driven businesses.2 “Startup” was put into use more in the late 1990s when the phrase was used frequently to describe companies in the dot-com bubble Also known as “the dot-com boom”, this is a speculation bubble occurred in the late 1990s, early 2000s and was given the significant title thanks to the wide-spread usage of internet Essentially, several new Internet-based businesses were established to capture the new-found market These “dot-com” companies, submerged in large speculative investments, were said to be the first batch of recognized startups.3 The usage of “startup” reached a peak around 2002, shortly after the internet bubble and apparently died out from then until 2008 By this time, the Quora (2011), What is the origin of the term "s tartup", and when did this word start to appear? , https://www.quora.com/What-is-the-origin-of-the-term-startup-and-when-did-this-word-startto-appear Growly (2017), What is a startup? The historical background , https://www.growly.io/what-isa-startup-the-historical-background/ term was used to reference the second generation of internet-based enterprises, with Facebook being the most outstanding one Since the end of the 2008 global financial crisis until now, startup once again finds itself to become a common term, nonetheless, mostly branded to technology firms This brings the question, what is the true definition of “startup”? There are many aspects to define a startup on, in which there are two traditional streams While some define “startup” as a phase, others see it as the financial status of the company We will look into both of these points of view, as well as considering other aspects of startups On one hand, “startup” can be defined as the very first stage in the business process While the American Heritage Dictionary and MerriamWebster not consider startups anything more than a freshly operated business, the business dictionary stated startup is the early stage in the life cycle of an enterprise in which “the entrepreneur moves from the idea stage to securing financing, laying down the basic structure of the business, and initiating operations or trading” This explanation would usually be accompanied other signs to indicate a “graduation” from the startup phase, such as an acquisition by a bigger company, having more than one office, gaining over $20 million in revenues, having over 80 employees, being led by a board with over five members, and, selling shares and so on Basically, when companies show signs of scaling and become more profitable, they are no longer considered startups However, there exists a point of confusion in this theory Taking into account the “undergraduate” conditions, doesn’t it mean many companies can be a startup for years, while others only take months to be called otherwise Also, the definition fails to address why startups can’t be profitable, as any sign of scaling could take away the title The lack of details attached to this definition is part of why Uber and Airbnb, founded a decade ago, are still miscalled In regards to the additional conditions, many startup founders disapproved of the BusinessDictionary http://www.businessdictionary.com/definition/startup.html (2018), Startup, idea that a startup is outlined by metrics, as it takes any form, stage, and size Therefore, although the definition gives us a general picture of startup, it remains flaw-some On the other hand, “startup” may also be defined based on its financial status, most of which see the small self-fund as the main criteria Startup businesses are said to have “low bootstrapping costs”, meaning that it operates on self-investment that are low in value and without utilizing external capitals Investopedia (2017), a well-known economic-and-business-driven website, also identify startup based on its monetary state during the first stage of its operations “These companies are often initially bankrolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand Due to limited revenue or high costs, most of these small-scale operations are not sustainable in the long term without additional funding from venture capitalists” Another financial theory bases startup on the “50-100-500 rule” Accordingly, these are specific guidelines that once a company surpass them, they are no longer considered startups Specifically, startups are companies which earn less than $50 million in annual revenue run rate, employ less than 100 staffs and being valued under $500 million Exceeding these numbers, they are just regular companies hunting for or actively avoiding an IPO Under this theory, there is also an in-between state, post-startup, and pre-public, in which firms are called “unicorns” The theory states unicorns are private tech company founded after 2010 Despite being valued over one billion or more on paper, they have yet to issue an IPO If startups are considered children, then unicorns are adolescences and after the IPO, companies mature into an adult Based on this financial model, companies such as Xiaomi, Uber, and Airbnb, all of which worth over $30 billion, are no longer startups They are fast-growing, highly valued unicorns, regardless of the public misconception However, this is against the common perception of considering unicorns as successful startups There also exists another point of view which zooms in on the uniqueness of startups While startups can be jokingly described as a company “working to Investopedia (2018), Startup, https://www.investopedia.com/terms/s/startup.asp TechCrunch (2014), What the hell is a startup https://beta.techcrunch.com/2014/12/30/what-the-hell-is-a-startup-anyway/ anyway? , solve a problem where the solution is not obvious and success is not guaranteed”, it is indeed referring to an innovative and rather risky business to solve current pain points existing among customers This idea is also shared by Eric Ries, which depicted a startup as “a human institution designed to deliver a new product or service under conditions of extreme uncertainty.” However, one thing that is rarely highlighted in these definitions but are seen in multiple examples of startups is their abilities to grow Among advocators of this explanation, there is Silicon Valley’s most well-known entrepreneurial educators, Steve Blank He described startup as “a temporary organization designed to search for a repeatable and scalable business model” Paul Graham, an investor also agrees that a startup signifies “a company designed to scale very quickly” and indicate that it is the development beyond the borders that separate startups from regular small businesses Though haven’t been proven wrong, purely defining startup on this aspect appears to be incomplete.9 Since considering startup on separate aspects is insufficient, the most comprehensive definition of “startup” should be a combination of all of the above, accompanied with its purpose and development process Thereby, a startup firstly should be identified as a business which is newly formed Second, it aims at a rapid growth by “developing or offering an innovative product, process or service” that addresses a particular market gap Third, regarding size, startup usually starts with a small budget, the same as the majority of entrepreneurs, but it should be built with a “scalable business model” Details regarding the specific development which involves validation and research for target markets will be discuss in a later section Again, this is not the single most accurate definition of “startup” but rather a blend of the most general features all startups share However, it is definitely one of the more completed explanations of the term.10 Ries (2018), The lean startup methodology , http://theleanstartup.com/principles Forbes (2013), What is a startup?, https://www.forbes.com/sites/natalierobehmed/2013/12/16/ what-is-a-startup/#207f8da44044 Paul Graham (2012), Want to start a startup?, http://www.paulgraham.com/growth.html 10 Tech Target (2018), Startup company, https://searchcio.techtarget.com/definition/startup ... topic: ? ?Startup in Israel and Singapore: Outlook, stimulating factors, evaluation and recommendation for Vietnam. ” I would like to thank all of the professors and lecturers in the Faculty of International... HỌC VIỆN NGOẠI GIAO KHOA KINH TẾ QUỐC TẾ KHÓA LUẬN TỐT NGHIỆP STARTUP IN ISRAEL AND SINGAPORE: OUTLOOK, STIMULATING FACTORS, EVALUATION AND RECOMMENDATION FOR VIETNAM Giáo viên hướng... special cases is insignificant, therefore this roadmap remains factual CHAPTER 2: THE STARTUP OUTLOOK AND POLICIES IN ISRAEL AND SINGAPORE 2.1 Israel 2.1.1 Startup outlook in Israel Israel is a small