Three Hong Kong startups get a leg up from Alibaba
Alibaba announces the first three startups to be selected into its HK$1 billion fund for Hong Kong entrepreneurs
Three Hong Kong startups are the first to be selected for an investment programme under e-commerce giant Alibaba’s HK$1 billion fund for entrepreneurs in the city.
GoGoVan, an app connecting users to delivery service providers, and Shopline, a DIY e-commerce platform allowing merchants to set up an online shop, are two well-established startups. Along with YEECHOO, a designer apparel rental platform in its initial stages of development, they make up the first batch of selected companies and will receive a small portion of the HK$1 billion.
“I’m happy we can see this kind of innovation in Hong Kong,” said Joe Tsai, Executive Vice Chairman of Alibaba Group - which owns the South China Morning Post - and board director of the fund, at a Thursday conference. “That sense of passion and hope for the future is something we want to encourage - and we’re willing to put capital behind it.”
The Alibaba Hong Kong Entrepreneurs Fund is an initiative flagged by Alibaba chairman Jack Ma as an opportunity for startups to access capital and build their businesses in mainland China through the company’s e-commerce platforms and other services.
The fund has received more than 200 proposals since its November launch and appointed Shanghai-based venture capital firm Gobi Partners as its first investment manager.
Cindy Chow, executive director of the fund, told the Post that the fund will take “no more than” a 20 to 30 per cent stake in each startup. Although this percentage may increase later, it will remain a minority shareholder. The amount of capital given will vary depending on commercial negotiations and each company’s needs and stages of development.
“We don’t have a set target. For this first batch of investments, the total amount ... as a percentage of the HK$1 billion fund, it’s talking about a small portion,” Chow said, adding that at a certain stage, returns from each startup will be put back into the fund.
“If we can provide a platform for them to grow within our whole ecosystem, both sides will benefit from our cooperation,” Chow said. “The partnership can make the whole ecosystem more robust.”
For the entrepreneurs, what sets this fund apart is its focus on Hong Kong and the chance to gain strategic support and expertise from Alibaba, as well as mentorship from the fund’s board of directors.
“All these directors ... are kind of rock star entrepreneurs and businessmen. Getting advice from them is what I call priceless,” said Steven Lam, chief executive and co-founder of GoGoVan.
To qualify, a startup must have a nexus to the city and most of its founders must be Hong Kong permanent residents. The business must also have the potential to expand overseas, and must be developed on an Alibaba e-commerce platform or service.
“There aren’t that many funds targeted for Hong Kong. This is a fund that’s closing a gap,” said Tony Wong, chief executive and co-founder of Shopline. “There are a lot of synergies between Alibaba and Shopline because we’re an e-commerce platform. We can learn a lot from them.”
Alibaba also announced a Taiwan Entrepreneurs Fund in November with NT$10 billion (HK$2.3 billion) earmarked for the island’s entrepreneurs. The company does not have plans to establish another fund at present.