Top firms leverage capital for long-term gains amid challenges

Accessing capital remains a major challenge for many businesses, especially in an unstable economic environment.

More than half of the businesses surveyed in the 2023 provincial competitiveness index report indicated difficulties in accessing capital, marking it as the most common challenge they face.

Access to capital is not merely a financial puzzle; it also reflects a company's management capability and strategic vision.

The best-managed companies don’t just seek out capital - they know how to maximize their investments, laying a strong foundation for sustainable growth.

Transparency builds investors trust

During the Covid-19 crisis, e-commerce support company OnPoint demonstrated significant appeal by successfully raising funds twice. In 2020, the company secured $8 million from SeaTown Private Capital Master Fund under Temasek.

“When the funds were signed off in April 2020, while Ho Chi Minh City was in lockdown, the investor still decided to invest without hesitation,” said Tran Vu Quang, CEO of OnPoint, at a Deloitte-hosted seminar on "Accessing Capital from Institutional and Investment Funds."

Even when Sea’s shares plummeted by nearly 90 per cent, OnPoint still attracted $50 million from investors in Series B, thanks to its robust business strategy and growth potential in the Southeast Asian market. This underscores the company’s position and resilience in the face of challenges.

According to Quang, luck is important, but the key to building investor trust lies in the founder's deep understanding of the company and belief in its future.

“Even when the company isn't performing well, you must believe that it will improve, survive, and grow - this inspires investors. In any fundraising round, investors look at the founder; as long as the founder is there, the company will survive,” Quang said, as OnPoint was honored as one of the four best-managed companies in 2024 by Deloitte Vietnam.

Quang believes that when a founder clearly understands why they need capital, they will be motivated to find the right source of funds, the right partners, and the most effective approach.

For Quang, every meeting with investors is a valuable opportunity to learn and understand their concerns and perspectives. Whether successful in raising funds or not, the company continues to grow. Each time the goal isn’t met, he still receives feedback and advice from experienced professionals, helping the company to improve.

As a judge in the "Best-Managed Companies 2024" program, FiinGroup Chairman Nguyen Quang Thuan also emphasized the importance of building trust with investors.

To achieve this, Thuan has always prioritized transparency since the company's founding by inviting Big4 auditors annually. As a result, when investors visit, Thuan can present them with transparent financial reports.

In September 2024, FiinGroup received equity investment and formed a strategic partnership with Japan’s Nikkei and Quick corporations. Both investors currently hold over 17.5 per cent equity in FiinGroup.

According to Thuan, maintaining transparency ensures that founders continue to gain investors' empathy even in the worst-case scenarios.

“Be proactive in being transparent about plans, including risks. Be transparent within the board of directors and shareholders so that even in failure, there's still an opportunity to start again. Otherwise, you risk losing all reputation and credibility,” Thuan said, adding that transparency reflects responsibility and respect for partners.

Echoing OnPoint's founder, Thuan said that he treats the company like his child. Despite being busy with hundreds of tasks daily, he constantly calculates the company’s value.

“I don’t pay dividends but allocate all profits to R&D, aiming for sustainable growth. One dollar invested to create ten dollars in new revenue increases the company's value,” Thuan said.

Strategic timing and partnerships

Founded in 1990 and steadily growing, by 2014, Pham Nguyen Confectionery Company faced the need for substantial development and prepared to seek external capital.

CEO of Pham Nguyen Confectionery, Christian Leitzinger, recalled that time as a period of attractive investment prospects, with the company frequently receiving numerous investment offers at favorable valuations.

With thorough preparation, especially in legal aspects and adherence to management strategies, the second-generation leadership of Pham Nguyen Confectionery chose the right investor to build a resilient business together.

In 2016, Pham Nguyen Confectionery received a $9.3 million investment from Japan’s Mizuho ASEAN Investment LP fund.

“They were very professional and helped the company grow in ways we couldn’t have achieved on our own. This not only spurred growth but also strengthened shareholder confidence,” he said.

By choosing an investor who shared the same values, the next generation of Pham Nguyen Confectionery balanced protecting the legacy of the founding generation while introducing innovation, continuing to build the legacy for the third generation. At the same time, they ensured that capital utilization brought value to shareholders.

“They must be people you want to talk to and work closely with - not just taking money. They bring value to you, and you want to do the same. Real collaboration creates sustainable development,” said the founder’s son-in-law of Pham Nguyen Confectionery.

The timing and usage of capital are extremely important. According to FiinGroup’s Chairman, there is always a group of investors interested in specific industries at certain stages of development. Businesses need to actively engage, reach out, and thoroughly vet potential investors, avoiding situations where months are spent meeting investors repeatedly without achieving desired results.

Thuan also believes that each stage of a business requires a suitable capital access channel. For example, in the early stages, FiinGroup opted to receive capital from angel investors instead of venture capital funds and avoided debt to mitigate risks.

On its fundraising journey, OnPoint was fortunate to find investors who shared long-term values. For instance, a subsidiary of Temasek invested in OnPoint with a 10-year vision, not only providing capital for short-term growth but also focusing on creating sustainable value for customers and shareholders.

Quang recounted that in the first month after receiving capital, he spent the entire day with investors helping them understand the company and discussing future strategies.

Every quarter, they meet once, spending one hour reviewing results and two hours discussing the future and cooperation plans. OnPoint ensures investors understand the company’s context and work together to find solutions to challenges.

“When raising capital, we always consider how to use it most effectively, from defining strategies to allocating resources so that the company can serve and create maximum value,” Quang said.