Factors Affecting Business Angels Investment in Vietnam

Nguyen Thi Kim Anh, Vu Thanh Huong, Nguyen Thi Minh Phuong, Dang Thanh Dat


The paper aims at investigating and comparing the factors determining investment decisions by business angels (BAs) from the viewpoints of BAs and startups in Vietnam based on a framework synthesized from a literature review and primary data from in-depth interviews conducted with 8 startups and 15 angel investors. The results show that the startups’ founder, working team, financial issues, product and market, and strategy related to exit and the roles of BAs are startup-related factors determining BAs’ investment in Vietnam. For BA-related factors, the BAs’ experience, investment objectives and preferences, and culture are key determinants. The novelty of the paper is to find out the gaps between the perspectives of BAs and startups, and the difference between Vietnamese and foreign BAs’ viewpoints. The finding is that BAs, more strictly than startups, assess their business plan, financial state, product, market, and targeted consumers. Startups neglect the exit strategy and role of BAs in invested startups. In addition, foreign and domestic BAs have different opinions on startups’ market scale, and expectation of profits and BAs’ roles in startups. The paper ends by providing some implications for Vietnamese startups to attract more angel investment, focusing on improving the quality of human resources, developing a profitable, honest, and realistic business plan, and setting up a long-run vision towards the global market.


Doi: 10.28991/ESJ-2023-07-02-07

Full Text: PDF


Startups; Business Angels (BAs); Angel Investment Determinants; Vietnam.


Van Osnabrugge, M., & Robinson, R. J. (2000). Angel investing: matching startup funds with startup companies: the guide for entrepreneurs, individual investors, and venture capitalist. John Wiley & Sons, Hoboken, United States.

Landström, H., & Mason, C. (2016). Handbook of research on business angels. Edward Elgar Publishing, Cheltenham, United Kingdom. doi:10.4337/9781783471720.

Sohl, J. (2012). The changing nature of the angel market. Handbook of Research on Venture Capital: Volume 2. Edward Elgar Publishing, Cheltenham, United Kingdom. doi:10.4337/9781781009116.00008.

Ramadani, V. (2012). The importance of angel investors in financing the growth of small and medium sized enterprises. International Journal of Academic Research in Business and Social Sciences, 2(7), 306-322.

Scheela, W., Trang, N. T. T., & Anh, N. T. K. (2018). Business angel investing in Vietnam: An exploratory study. Journal of Private Equity, 21(2), 96–106. doi:10.3905/JPE.2018.1.067.

Scheela, W., & Jittrapanun, T. (2012). Do institutions matter for business angel investing in emerging Asian markets? Venture Capital, 14(4), 289–308. doi:10.1080/13691066.2012.672020.

Sasakawa Peace Foundation (2020). The Emergence of Angel Investment Network in the Southeast Asia. Sasakawa Peace Foundation (SPF) / Angel Investment Network Indonesia (ANGIN), Report 2. Available online: https://www.spf.org/en/gender/ publications/20200612.html (accessed on January 2023).

World Bank. (2022). From the Last Mile to the Next Mile–2022 Vietnam Poverty & Equity Assessment. World Bank Group, Washington, United States.

Taussig, M., Schwarz, M., Chin, K. (2012). Private Equity amid Evolving Market Institutions: The Case of Vietnam. Private Equity in Emerging Markets. Palgrave Macmillan, New York, United States. doi:10.1057/9781137309433_23.

Scheela, W., Isidro, E., Jittrapanun, T., & Trang, N. T. T. (2015). Formal and informal venture capital investing in emerging economies in Southeast Asia. Asia Pacific Journal of Management, 32(3), 597–617. doi:10.1007/s10490-015-9420-5.

Thong, V. (2021). Vietnamese startups draw 1.3 billion worth of investment in 2021. VnExpress. Available online: https://e.vnexpress.net/news/business/data-speaks/vietnamese-startups-draw-1-3-bln-worth-of-investments-in-2021-4410036.html (accessed on January 2023).

Scheela, W., & Van Dinh, N. (2001). Doing business in Vietnam. Thunderbird International Business Review, 43(5), 669–687. doi:10.1002/tie.1021.

Scheela, W. J., & Van Dinh, N. (2004). Venture capital in a transition economy: The case of Vietnam. Venture Capital, 6(4), 333–350. doi:10.1080/1369106042000258508.

Scheela, W., Isidro, E., Jittrapanun, T., Trang, N. T. T., & Gunawan, J. (2012). Business Angel Investing in Emerging Economies: Policy Implications for Southeast Asia. Kauffman Foundation’s International Research and Policy Roundtable, Liverpool, United Kingdom.

Mason, C.M. (2006). Informal Sources of Venture Finance. In: Parker, S. (eds.) The Life Cycle of Entrepreneurial Ventures. International Handbook Series on Entrepreneurship. 3, Springer, Boston, United States. doi:10.1007/978-0-387-32313-8_10.

Morrissette, S. G. (2007). A Profile of Angel Investors. The Journal of Private Equity, 10(3), 52–66. doi:10.3905/jpe.2007.686430.

Mason, C. M., & Harrison, R. T. (2008). Measuring business angel investment activity in the United Kingdom: A review of potential data sources. Venture Capital, 10(4), 309–330. doi:10.1080/13691060802380098.

Macmillan, I. C., Siegel, R., & Narasimha, P. N. S. (1985). Criteria used by venture capitalists to evaluate new venture proposals. Journal of Business Venturing, 1(1), 119–128. doi:10.1016/0883-9026(85)90011-4.

Macmillan, I. C., Zemann, L., & Subbanarasimha, P. N. (2022). Criteria Distinguishing Successful from Unsuccessful Ventures in the Venture Screening Process. Venture Capital, 119–133, Routledge, United Kingdom. doi:10.4324/9781315235110-7.

Mason, C., & Stark, M. (2004). What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels. International Small Business Journal, 22(3), 227–248. doi:10.1177/0266242604042377.

Sudek, R. (2006). Angel investment criteria. Journal of Small Business Strategy, 17(2), 89-104.

Dat, D. T. (2021). Investment Selection Criteria of Foreign Angel Investors in Startups in Vietnam. Advances in Economics, Business and Management Research, 196, 1-8. doi:10.2991/aebmr.k.211119.030.

Czuchry, A., Carson, S., Lampley, J., & Knight, W. (2019). A Conceptual Framework for Implementation: Necessary and Sufficient Conditions for Southeast Angel Investments. 2019 ASEE Annual Conference & Exposition Proceedings. doi:10.18260/1-2--31948.

Shepherd, D. A. (1999). Venture capitalists’ assessment of new venture survival. Management Science, 45(5), 621–632. doi:10.1287/mnsc.45.5.621.

Sandberg, W. R., Schweiger, D. M., & Hofer, C. W. (1989). The Use of Verbal Protocols in Determining Venture Capitalists’ Decision Processes. Entrepreneurship Theory and Practice, 13(2), 8–20. doi:10.1177/104225878801300204.

Bygrave, W. D., Hay, M., Ng, E., & Reynolds, P. (2003). Executive forum: A study of informal investing in 29 nations composing the Global Entrepreneurship Monitor. Venture Capital, 5(2), 101–116. doi:10.1080/1369106032000097021.

Ahtila, V. (2014). Business angel investment decision-making criteria, Master Thesis, Department of Finance, Aalto University, Singapore.

Reuber, A. R., & Fischer, E. M. (1994). Entrepreneurs’ Experience, Expertise, and the Performance of Technology-Based Firms. IEEE Transactions on Engineering Management, 41(4), 365–374. doi:10.1109/17.364560.

Baron, R. A., & Markman, G. D. (2003). Beyond social capital: The role of entrepreneurs’ social competence in their financial success. Journal of Business Venturing, 18(1), 41–60. doi:10.1016/S0883-9026(00)00069-0.

Mitteness, C. R., Sudek, R., & Baucus, M. S. (2010). Entrepreneurs as authentic transformational leaders: critical behaviors for gaining angel capital. Frontiers of Entrepreneurship Research, 30(5), 1-3.

Baron, R. A. (2007). Behavioral and cognitive factors in entrepreneurship: entrepreneurs as the active element in new venture creation. Strategic Entrepreneurship Journal, 1(1–2), 167–182. doi:10.1002/sej.12.

Samuelson, P. A. (1969). Lifetime Portfolio Selection by Dynamic Stochastic Programming. The Review of Economics and Statistics, 51(3), 239. doi:10.2307/1926559.

Merton, R. C. (1975). Optimum consumption and portfolio rules in a continuous-time model. In Stochastic optimization models in finance, 621-661, Academic Press, Cambridge, Massachusetts, United States. doi:10.1016/b978-0-12-780850-5.50052-6.

Jeffrey, S. A., Lévesque, M., & Maxwell, A. L. (2016). The non-compensatory relationship between risk and return in business angel investment decision making. Venture Capital, 18(3), 189–209. doi:10.1080/13691066.2016.1172748.

Collewaert, V. (2012). Angel Investors’ and Entrepreneurs’ Intentions to Exit Their Ventures: A Conflict Perspective. Entrepreneurship: Theory and Practice, 36(4), 753–779. doi:10.1111/j.1540-6520.2011.00456.x.

Mason, C., & Harrison, R. (1996). Why “Business Angels” say no: A case study of opportunities rejected by an informal investor syndicate. International Small Business Journal, 14(2), 35–51. doi:10.1177/0266242696142003.

Wiltbank, R., Read, S., Dew, N., & Sarasvathy, S. D. (2009). Prediction and control under uncertainty: Outcomes in angel investing. Journal of Business Venturing, 24(2), 116–133. doi:10.1016/j.jbusvent.2007.11.004.

Harrison, R. T., Dibben, M. R., & Mason, C. M. (1997). The role of trust in the informal investor's investment decision: An exploratory analysis. Entrepreneurship Theory and Practice, 21(4), 63-81. doi:10.1177/104225879702100405.

Wetzel, W. E., & Seymour, C. (1981). Informal risk capital in New England. Frontiers of entrepreneurship research, 1981, 217-45.

Wetzel Jr, W. E. (1983). Angels and informal risk capital. Sloan Management Review, 24(4), 1-23.

Wang, J., Scheela, W. (2020). Profiles of Chinese Business Angels. Entrepreneurial Finance in Emerging Markets. Palgrave Macmillan, Cham, Switzerland. doi:10.1007/978-3-030-46220-8_14.

Wang, J. (2020). Business Angels’ Investment Strategies and Organizational Change in China. China Research Center, 19(3).

Wilson, K. E. (2012). Financing High-Growth Firms: The Role of Angel Investors. SSRN Electronic Journal. doi:10.2139/ssrn.1983115.

Bruton, G. D., Fried, V. H., & Hisrich, R. D. (2000). CEO Dismissal in Venture Capital-Backed Firms: Further Evidence from an Agency Perspective. Entrepreneurship Theory and Practice, 24(4), 69–77. doi:10.1177/104225870002400405.

Zinecker, M., Skalicka, M., Balcerzak, A. P., & Pietrzak, M. B. (2022). Business angels in the Czech Republic: characteristics and a classification with policy implications. Economic Research-Ekonomska Istrazivanja, 35(1), 273–298. doi:10.1080/1331677X.2021.1890179.

Mason, C., Botelho, T., & Zygmunt, J. (2017). Why business angels reject investment opportunities: Is it personal? International Small Business Journal: Researching Entrepreneurship, 35(5), 519–534. doi:10.1177/0266242616646622.

Kaur, D. (2021). Why Vietnam is the leading startup hub of Southeast Asia. TECHWIRE ASIA. Available online: https://techwireasia.com/2021/05/why-vietnam-is-the-leading-startup-hub-of-southeast-asia/ (accessed on January 2023).

National Science and Technology Information Agency. (2020). The National Program 844 to "Supporting the National Innovation Initiative to 2025" (ISEV). Ministry of Science and Technology, Hanoi, Vietnam. Available online: http://startup.gov.vn/Pages/chi-tiet-tin-tuc.aspx?l=Tintucsukien&ItemID=288 (accessed on December 2022).

Full Text: PDF

DOI: 10.28991/ESJ-2023-07-02-07


  • There are currently no refbacks.

Copyright (c) 2023 Do Huu Hai