What founders need to know about Venture capital funding process? Part 1Financing options for new business ventures, such as investments from friends and family, loans from commercial banks, or angel investments from wealthy individuals, have been around for a long time, even in Vietnam. However, not until recently did venture capital come under the spotlight as a viable source of funding, as tech-enabled startups in Vietnam are on the rise. In fact, according to Tech in Asia, in 2019, Vietnam was ranked the third most active startup ecosystem in Southeast Asia when it comes to venture capital activities.  Furthermore, Vietnam's good handle on the Covid-19 crisis in the first half of 2020 allowed the country's economy to reopen safely and sooner compared to its neighbors, making it an appealing destination for regional venture investments. Yet, most of the VC investments went to later stage companies, leaving a large chasm between late-stage investments and early-stage investments in the country. In my opinion, this is largely because the Vietnamese startup ecosystem is still nascent, consisting mostly of first-time founders who have not raised money from venture capitalists previously.  This has resulted in a mismatch in expectations as well as negotiation power between investors and founders in Vietnam. In fact, a handful of the companies I’ve chatted with in my due diligence process have sold much of their ownership (35%- 50%) in the first two rounds of funding. As a result, several founders are viewed as unsophisticated and facing increasing challenges to raise venture capital successfully. For Vietnam’s startup ecosystem to mature with successful venture-backed companies, it is crucial that Vietnamese founders put in the time and effort to understand how venture capitalists think, as well as how the venture funding process works. Below are three fundamental topics with regard to the venture capital funding process. The Due Diligence process When founders first engage with venture capitalists, the due diligence process often kickstarts after the founders apply to the fund or get introduced via a mutual contact. If there’s initial interest from the investors, they will go ahead with a call or a short meeting to ask more questions. After the call, there might be several follow-up emails or calls with an Investment Committee. This process might take anywhere from 2 weeks (at small and lean funds, like Hustle Fund, that invest a smaller amount) or 3 months (at larger funds that are writing bigger checks).  Regardless of the length or stage of investment, investors often use the same framework to answer 5 key questions in the due diligence process to determine whether a company is a good fit to their portfolio. It’s important for entrepreneurs to understand this frame of thoughts and anticipate the questions they will be asked in advance. 5 key questions are as below: 1. What is the problem you're trying to solve? 2. What is the solution? 3. Have you proven product-market fit? 4. What's your go-to-market strategy? 5. Who's the team? Here is the 2nd and 3rd part of this article: Part 2:  http://startup.gov.vn/Pages/chi-tiet-tin-tuc.aspx?l=Tintucsukien&ItemID=303 Part 3: http://startup.gov.vn/Pages/chi-tiet-tin-tuc.aspx?l=Tintucsukien&ItemID=304