Head start for bright sparks
Alibaba executive Cindy Chow has a mission – to identify and help nurture entrepreneurs to succeed as part of giving back to the community
“Twenty years ago when I graduated, none of my friends talked about starting their own business.” This was how Cindy Chow Lok Mei-ki, a mother of two and native Hongkonger, reminisced about those good old days, and how her generation saw things then.
“I don’t mean we couldn’t have gone in that direction, but the landscape is totally different now,” Chow, the executive director of the Alibaba Entrepreneurs Fund in Hong Kong, told the South China Morning Post.
“There are more opportunities today. With the internet, mobile devices and other advances in technology, you have to be more open-minded now.”
Still, Chow smiled at the thought that there may be parents across this city of 7.3 million people with different ideas about their children becoming entrepreneurs someday.
“I was at this interesting group discussion, and heard a panellist say, ‘It can be very hard sometimes to convince the parents’,” she said.
For Chow, her responsibility is to identify new entrepreneurs in the city, help nurture their viable business ideas and put them in a position to succeed.
That may take some work, but Chow has plenty of funding from e-commerce powerhouse Alibaba Group Holding to support her mission.
New York-listed Alibaba, which owns the Post, launched in November last year its HK$1 billion entrepreneurs fund for the city.
This not-for-profit initiative, which Alibaba executive chairman Jack Ma Yun flagged in February last year, will see qualified start-ups gain access to capital and be able to build their businesses on the back of the mainland company’s various e-commerce platforms, affiliated companies and other enterprises, such as logistics and financial services.
“This is not a charity,” Alibaba executive vice-chairman Joseph Tsai Chung-hsin said at the launch. “[Qualification] is exactly the same process that any other entrepreneur goes through to get funding from a venture capitalist. This is not easy.”
Alibaba also announced another entrepreneurs fund in Taiwan the same month with NT$10 billion (HK$2.4 billion) earmarked for the island’s start-ups.
Founded in Hangzhou in 1999, Alibaba runs the world’s largest online and mobile marketplaces in retail and wholesale trade. Its US$25 billion initial public offering in New York in 2014 was the biggest stock market flotation in history.
Chow, a certified public accountant, joined Alibaba in 2007 after working at a number of Hong Kong-listed companies, where she honed her skills in financing, management reporting and planning.
A graduate of Chinese University and holder of a master of business administration degree from the Hong Kong University of Science and Technology, Chow’s work at Alibaba involved financial control and planning.
“I helped write and review the annual reports and made sure the balance sheets were balanced,” she said.
Chow most recently served as senior director of international finance at Alibaba.
While she liked her role at Alibaba, Chow said she wanted to do something different after 20 years as an accountant.
When plans for the entrepreneurs fund were being drawn up, she made her move.
Chow said she explained to Tsai, who had been Alibaba’s long-time chief financial officer, that she was a native Hongkonger who wanted to give back to her community through this opportunity to further cultivate the city’s entrepreneurial spirit.
Tsai confirmed their discussion, acknowledging Chow’s commitment to be part of the initiative.
He said Chow “expressed how passionate she was” about the fund, and that she had the vital experience and know-how to lead the programme.
To assist Chow in her current role, Shanghai-based venture capital firm Gobi Partners was appointed as the fund’s first investment manager.
In May, Chow announced the three Hong Kong start-ups selected as the first recipients under the fund –– transport and logistics app operator GoGoVan, do-it-yourself e-commerce platform provider Shopline and Yeechoo, which runs an online designer apparel rental operation.
Chow said about 30 per cent of the more than 200 initial applicants to the fund were e-commerce start-ups.
Two to three more start-ups are “in the pipeline” as the next batch of investment recipients under the fund, according to Chow.
“I can’t promise that this will be the trend going forward,” she said, of announcing a round of investments every few months.
“What we’re trying to do is groom those we think may have potential.
“So it very much depends on how many good companies we come across and the due diligence process.
“We want to get to know these entrepreneurs, see how good their ideas are, go through the details and see how quickly we can close a deal. It’s hard to tell.”
Chow pointed out that HK$1 billion might be a lot of money, “but it’s not a lot for a venture capitalist”.
The fund, however small, may provide some bright spot in the present investment climate.
A report published this month by KPMG and CB Insights said venture capital investment and deal activity in Asia dropped sharply for the third straight quarter in the three months to June, “highlighting concerns regarding global uncertainties, the slowing of the Chinese economy and depreciation of the yuan”.
The report showed that seed or angel deals, which provide the initial capital used to start a business, held relatively steady in the first six months of this year, while most other stages like Series A fell. A Series A funding round marks a company’s first significant round of venture capital financing. “Median early-stage deal size to Asian VC-backed companies remains at or above US$2 million across the past five quarters,” the report said.
Chow said the fund had not set any targeted amount of investments, and that its recent recipients took “a small portion”.
“Eventually, we would like to see some of our investments become successful,” she said. “Successful in the sense that even if a company does not have a big [initial public offering], it manages to get a follow-up round of funding from other investors. That would also show the company is doing well.
“We don’t expect to make a 1,000 per cent return on our investment, just a meaningful return that we can plough back to the fund and into other start-ups.”
Tony Wong, the chief executive of Shopline, has said that the Alibaba fund was helping close a gap in the market. “There aren’t that many funds targeted for Hong Kong,” Wong said.
Chow said there was plenty more work to do, noting that her team started running workshops for start-ups to learn about crafting their business plans.
She also encouraged the participation of entrepreneurs young and old. Those applicants who missed the cut this year could also try again with better ideas and sound business proposals.
Asked if she would encourage her two children, aged 10 and 13 years, to pursue the life of an entrepreneur, Chow said, “I would tell them that there are more things they can explore today and they should be ready to embrace the new things ahead”.