Although a Ho Chi Minh City-based technology startup successfully raised a huge sum of US$1 million initially, it will likely be forced to cease operations because it is now running out of funds.

With the difficulties in the market, including decreased demand in the sector, several technology companies have to consider as many options as possible to maintain their business and avoid being taken over by competitors.

Many of them have done their best to survive the difficult time and to dodge shutdowns under any circumstances.

What are the causes?

One of the startups mentioned above, whose owner refused to name the company, admitted that it is having problems now.

This startup, whose business is in the healthcare sector, successfully raised capital many times, sometimes as much as $1 million.

Although their business has a good purpose, which is to provide quality health services to customers through a mobile app, its activities have not been able to bear the fruit they had hoped for in practice.

N., the co-founder of the startup, has repeatedly looked for potential investors in recent years, hoping to get more money to sustain the company's operations.

"However, due to the current economic difficulties, many investors do not dare to get involved," said N. "It is likely that we will have to close the company."

Unikon, another startup that operates an AI content platform, is also having a hard time getting enough funding to overcome this difficult time, according to CEO Hoang Huong.

Hoang Huong believes that both customers and investors are saving as much as they can right now.

In light of this, "like other IT startups, we are facing a lot of pressure to innovate," Hoang Huong added.

Due to problems, such as the cost of maintaining staff and research and development, new products and technologies have not yet brought in revenue, according to the Unikon boss.

Even the 'unicorn' has problems

Indeed, not only general startups, but also unicorn-level firms, or those with a market capitalization of more than $1 billion, are struggling with challenges right now.

One executive of a 'unicorn,' who preferred to stay anonymous, said, "Most technology companies are all facing difficulties. We have to constantly invest in technology development and application to keep up with the global level and remain competitive. Although we spend so much, it is impossible to see the results immediately.”

Speaking to Tuoi Tre (Youth) newspaper about raising capital for startups, Hoang Kim Dung, national director of Genesia Venture in Vietnam, concluded, "It's impossible, and it cannot be positive."

The reasons for her conclusion are obvious: interest rates have been raised to an all-time high to control inflation around the world, leaving many tech companies without access to funding.

Waiting for political support

As an investor, Dung has noticed that the current economic fallout has altered the 'taste' of venture capital funds.

Accordingly, funds now only want to put money into startups whose business meets large and specific requirements, or into must-have things and services.

Nguyen Bach Diep, chairwoman of FPT Retail, which includes electronics retail chains FPT Store, F. Studio By FPT, and pharmacy chain Long Chau, presents her group's experience in overcoming challenges from an entrepreneur's perspective: flexibility.

For example, FPT Store needs to sell more household goods than ever before to gradually increase overall profit.

Nguyen Vu Anh, general director of Vietnamese search engine Coc Coc, said his company and others hope to be supported by the government and state agencies as they pursue their dream of developing 'Made in Vietnam' technological products.

Suggestions include linking potential resources at home and abroad, e.g. investment and consulting experts, as well as removing political obstacles.

In this way, Vietnamese enterprises would not be subordinate to foreign companies or corporations in developing and marketing products.

Technology retail also suffers losses

With the decline in demand for technology products in recent months, many retail chains are having to find ways to cut their losses.

"For every iPhone 14 sold, we suffer from losses in operating costs, but we have to accept them to get back new cash flows and prepare new product lines," a representative of an Apple Authorized Reseller (AAR) in Vietnam told Tuoi Tre.

Another representative from a different AAR said, "Losses peaked in April. We will soon close some retail stores whose operating costs are too high."

The total revenue of two retail chains The Gioi Di Dong and Dien May Xanh, fell 34 percent in the first quarter of 2023 compared to the same period last year, according to their financial statements.

In particular, total sales of smartphones and electronic devices fell 25-35 percent, while sales of laptops dropped 40-50 percent.

FPT Store, a major competitor of The Gioi Di Dong, is in the same dire straits, with total revenue in the first quarter down 20 percent compared to the same period last year.

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