Simon Galpin, director-general of investment promotion of InvestHK, notes that many start-ups that InvestHK assists are engaged in solutions for e-commerce or digital marketing. He believes that Hong Kong’s proximity to the manufacturing centre of high-end technology products in southern China, the high mobile penetration rate of 237 per cent, and a deep local talent pool add further appeal to the city’s start-up ecosystem.

Founded in 2010, Nest, Hong Kong’s first business incubator, also welcomes start-ups across industries to apply for its three-month incubation programme.

“We look for an idea that is unique, that has a digital, scalable element, which can go beyond Hong Kong and make it globally,” says Simon Squibb, chief executive of NEST.

Having himself established a creative agency, Squibb believes the most important thing is the founder. He says: “Being the founder of a start-up is a hard job, and we need to know that the founder will be able to persevere with it through the highs and also the lows.”

Executives from Cyberport and HKSTP are cognisant of Hong Kong’s potential, particularly for tech start-ups. Their view is in line with a call made by Forbes last year that Hong Kong is the world’s “No.1 Tech Capital to Watch”.

Tech start-ups: the next Silicon Valley?

Both Cyberport and HKSTP’s incubation programmes focus on technology. While Cyberport targets information and communications technology (ICT) start-ups, HKSTP has three incubation programmes catering to the needs of technology start-ups across the IT, biotech and energy sectors, including a 18-month Incu-App programme, a three-year Incu-Tech programme and a four-year Incu-Bio programme.

To decide whether or not to support a start-up, Cyberport takes into account a venture's management team, its project’s creativity, business viability, proposed half-yearly milestones and contribution to Hong Kong’s ICT industry.

HKSTP looks at the competence of a proposed project's management team, a sound business plan, innovation, R&D content and proposed milestones for every six months as qualitative assessment criteria. But Allen Yeung, vice president, business development and technology support of HKSTP, describes passion, perseverance and leadership as the most important qualities required in a successful tech start-up.

HKDC has an incubation programme specifically for the design industry across a variety of disciplines. As of July 2014, HKDC’s incubation programme has accepted 157 applications. These comprise product design, which accounts for 29.9 per cent, followed by fashion at 21 per cent and visual or spatial arts, at 18.5 per cent of the total.

Dr Edmund Lee, executive director of HKDC, sees Hong Kong’s potential for entrepreneurship lying beyond tech start-ups. The city earned a global reputation for the manufacture of toys and electrical appliances in the 1960s and remains a regional design centre with innovative products and talent in the design sector, he says.

While he highlights the prominence of design and designers in society, Lee notes that designers and businesses are facing an increasingly uncertain and complex business environment, where innovative culture is crucial.

“We look for companies with both design and business potential, creative with a global vision, passionate about design, resourceful with a can-do attitude and a strong business mindset to succeed,” he adds.

Polishing a rough diamond

While HKSTP, Cyberport and HKDC offer financial assistance for business operation, InvestHK and NEST provide a platform for entrepreneurs to raise funds directly from potential investors.

For instance, winners of the StartmeupHK Venture Programme will pitch to potential business partners and investors at the StartmeupHK Venture Forum, which Galpin anticipates several hundred people in the local and overseas start-up communities will attend.

Many designers are idealists – they think their ideas are the best – but they lack business perspective to make their big ideas economically viable and sustainable

NEST also takes its incubatees on a roadshow with over 100 investors. After three months, NEST will list them on Investable, an invite-only equity crowdfunding platform that provides start-ups with access to a wider network of investors, online presence on its website and all the necessary legal documentation required. Also, NEST may occasionally choose to invest directly in some start-ups.

Cyberport offers financial assistance to its incubates with HK$530,000 maximum assistance for those Hong Kong registered start-ups which have an office at its entrepreneurship centre (EC), and HK$330,000 for those who don’t.

HKSTP provides Incu-Tech start-ups with a maximum of HK$645,000 spread over three years, Incu-Bios with HK$860,000 over four years and Incu-Apps with HK$400,000 over 18 months. HKSTPC also offers a new initiative, Leading Enterprises Acceleration Programme (LEAP), to support incubatees and graduates to expand into overseas markets. 

All incubation programmes highlight mentorship, consultancy and networking opportunities.

Dr John Lo, chairman of design admission panel of Design Incubation Programme, describes the mentorship experience that its programme offers as “polishing a rough diamond”.

He says: “Many designers are idealists – they think their ideas are the best – but they lack business perspective to make their big ideas economically viable and sustainable.”

In addition, Cyberport, HKDC and HKSTP provide co-working space to their incubatees.

In September, Cyberport has launched its new 27,000 square-foot co-working space, Smart-Space 3F. Its competitive price ranges from HK$800 a month per hot desk to HK$5,000 a month per two-seater office.

HKDC offers free rental for office premises for the first year and 50 per cent off the rental fee for the second year.

HKSTP also provides 24-month rent-free office to start-ups with offices at EC during incubation. 

An overview on incubation programme offerings:

This year InvestHK’s StartmeupHK Venture Programme has drawn 550 entries, representing a rise of almost 40 per cent over last year. Galpin takes pride in the programme, which has attracted scalable start-ups, family offices and high-net-worth individuals interested in the investment potential Hong Kong's start-up ecosystem has to offer. “The rise in entries is a clear indication of Hong Kong’s continued appeal for start-up businesses,” he says.

Alice So, senior manager of the Entrepreneurship Centre, Cyberport, notes the rising number of co-working spaces and greater collaboration among start-up service providers, seeing it as a sign of evolution of the local start-up ecosystem.

“The local start-up ecosystem has been evolving tremendously in recent years”, So says.

She considers the city’s proximity to China as an edge, which offers start-ups further room to expand and helps them raise funds globally. The amount of investment Cyberport’s incubatees received from January 2006 to the end of July this year totalled HK$189,390,000, according to So.

Asked whether investors should look for start-ups from incubation programmes, Squibb says: “Start-ups that have gone through an incubation are guaranteed to have dedicated their full attention to building a business. Incubation programmes are tough, and those who make it through are determined, focused entrepreneurs.”