Venture capital showing more money for Hong Kong's tech start-ups
Hopes are growing among technology start-ups that venture capital cash will finally start pouring into the sector this year and give Hong Kong a chance of laying claim to being a true "tech town".
Hopes are growing among technology start-ups that venture capital cash will finally start pouring into the sector this year and give Hong Kong a chance of laying claim to being a true "tech town".
New ventures continually complain of a chronic shortage of cash, particularly for expansion and development after the initial start-up period, despite government incentives to support home-grown technology companies.
But fresh data from the Hong Kong Venture Capital and Private Equity Association (HKVCA) and a flurry of recent funding successes signals that change might be in the air.
Because the local tech sector hasn’t grown … nobody felt the need to offer financing
The average size of investments made by venture capital firms in local technology start-ups topped US$6 million in the first half of this year, versus US$4 million for the whole of last year, HKVCA data shows.
Meanwhile the legendary California-based venture capital firm Sequoia Capital recently joined Li Ka-shing's Tom Group and other investors to invest US$14 million in the Series A funding - the first round of financing from external investors after seed capital - conducted by WeLab, an internet finance technology company that launched the first social lending platform in Hong Kong last year.
"We expect the average size of funding for tech start-ups to significantly rise as more venture capital deals are consummated this year," Alfred Lam, research manager at the association, told the South China Morning Post.
But that would still be a tiny amount of money compared with the HK$6.46 trillion in total loans outstanding recorded by Hong Kong's banking sector last year. Those represent the kind of resources unavailable to fund local technology start-ups.