Connectors and start-ups are in Hong Kong’s DNA
The angel investment community has grown healthily in the past 12 to 18 months
Researchers and practitioners from Hong Kong’s start-up scene offered much food for thought on the city’s future as a start-up hub at last week’s StartmeupHK Festival organised by InvestHK.
The closing discussion stressed that each start-up ecosystem has unique attributes. Hong Kong’s greatest asset is that it is a small city economy intimately connected to the global networked economy, and this is now helping it to gain a presence on the innovation front, albeit different from other start-up hubs such as Silicon Valley.
As reported in a study by Compass, Innofoco and the University of Hong Kong, Hong Kong’s declining reputation as an entrepreneurial hub is on the brink of a renaissance, thanks to a remarkable resurgence of start-up activities in the past couple of years.
The study outlined what Hong Kong must do to solidify its position and move to the next stage of development of its start-up ecosystem.
First it must focus on talent and funding. Hong Kong can easily tap into the global talent pool through human and digital connections, and it should do so. It needs more than just tech talent, but also designers, product developers, marketing specialists and professionals who understand technology and innovation and are experts in commercialisation.
On funding, there are signs that the angel investment community has grown healthily in the past 12 to 18 months, especially among family offices and the second generations of high-net-worth individuals. The HK$2 billion Innovation and Technology Venture Fund to match investment in local start-ups with private venture capital funds might also help.
Second, Hong Kong has to think about how it will position itself. It lacks the scale to emulate Silicon Valley. Instead it should find niches in the global economic network and mobilise its people in the following ways:
It should play to its strengths as a service economy because innovation (whether it is technology related) is likely to accelerate within the service sector itself (e.g. financial services, education, health care, food and beverage, hospitality and logistics) as well as through the “servitisation” of the manufacturing industry.
It should aim to be more than a gateway to China, and instead aspire to be a “super connector” to the world. Hong Kong’s strength lies in implementing, adapting and scaling ideas that reach across the globe. This is not much different from its role in the last century as a packager and integrator of goods and services, albeit now they are higher value added and have a stronger component of technology and innovation.
It should also capitalise on its potential as a test market. New products and services can only be sold if there are venturesome customers to try them. Hong Kong is a cosmopolitan place that is very open to new ideas and at ease with both the East and the West. The local crowd is trend conscious and tourists come from everywhere.
And third, the government and society should do more to facilitate the development of Hong Kong’s budding start-up ecosystem.
The government could augment Hong Kong’s global footprint and connections by launching a sustained global marketing campaign to brand the city as a super connector for start-ups and accelerators, and attract them to develop their home or second home here. This would mean easing immigration barriers to encourage more overseas talent to work in Hong Kong.
Both the private and the public sectors could help to create demand for innovation. A few major corporations in Hong Kong are partnering with start-ups to build their innovation capacity. Such practices should be showcased and encouraged. The government should also be open to experimenting in such matters.
The government should also review and update the regulatory framework in sectors such as financial services to keep up with the disruptive changes brought by technology. Changing from an efficiency-driven model of economic development to an innovation-driven model will take time. But this will not happen if the government fails to move quickly and decisively.
At the society level, Hong Kong needs to improve its provision of STEM (science, technology, engineering and mathematics) education and change the mindset across all segments of society if it is to become the epicentre of start-up activities in Asia.
Hong Kong owes its success partly due to its fast, efficient and pragmatic trading culture. This culture should be harnessed to support innovation and entrepreneurial activities. Our eyes should be focussed on the global market place and our global network connections, including of course those across the border.
Richard Wong Yue-chim is Philip Wong Kennedy Wong Professor in Political Economy at the University of Hong Kong