Venture capital in a transition economy: The case of Vietnam

<title/> This paper presents exploratory case studies of five venture capital firms operating in the emerging and transition economy of Vietnam. Institutional theory is used as the theoretical framework to analyse the development of the venture capital industry in Vietnam. The authors explore the relationship between the lack of fully-developed institutions in Vietnam and the challenges facing venture capitalists in a transition economy. Similarities and differences between US and Vietnamese-based venture capitalist are also identified. Unlike US venture capitalists, it was found that venture capitalists operating in Vietnam must closely monitor their portfolio companies because of undeveloped institutions. The importance of networking with government officials was found to be a significant and unique value-added activity for venture capitalists operating in Vietnam. Differences between venture capitalists operating in transition and developed economies are clearly identified.