INNOVATION & START-UP

Hong Kong has world’s 5th-fastest-growing ecosystem of start-ups, study shows

PUBLISHED : Wednesday, 05 August, 2015, 2:09pm
UPDATED : Wednesday, 05 August, 2015, 2:44pm

Hong Kong has the fifth-fastest-growing ecosystem of start-ups in the world, according to a recent study that measured such indicators as the availability of venture capital and the acquisition value of start-ups over two years.

But the city’s start-up industry lags far behind that of long-term rival Singapore, another economic powerhouse in the region, the survey showed. 

Due to financial and time restraints, China, Japan and South Korea were excluded from the study: a list of 40 ecosystems compiled and ranked by San Francisco-based cloud analytics firm Compass.

It also ranked the overall state of various cities’ start-up ecosystems by taking into account their performance, funding, talent, market reach and experience.

In terms of growth, Hong Kong ranked joint fifth with Amsterdam. Berlin was first, followed by India’s Bangalore, Sao Paulo in Brazil and London.

Globally, Hong Kong placed 23rd. Singapore was 10th and Bangalore 15th. 

Silicon Valley, New York City and Los Angeles occupied the top three slots, respectively.

Hong Kong’s rapid growth was attributed to a resurgent entrepreneurial spirit, its proximity to the Chinese mainland, and convenient access to other Asian markets.

But the study noted that Hong Kong had “significantly lower” access to venture capital than cities like Singapore. 

It attributed this to local investors’ lack of experience in dealing with the tech industry and a preference toward “traditional” investment areas like manufacturing and trading.

“To realise its full potential as a start-up hub, Hong Kong should further develop its position as an integrator of ideas, talents and capital from around the world,” said Rachel Chan, founder of Innofoco.

READ MORE: Hong Kong grooms its own future start-ups at massive entrepreneurship summer camp

Innofoco is a Hong Kong-based consultancy that will work with Compass to publish a more detailed report on the city’s start-up scene in October.

Start-ups in the risk-averse city face a number of challenges. Many struggle to attract high-calibre technical staff, despite Hong Kong boasting several world-class universities, due to the competition from big companies, the study said.

Yet it identified a number of important drivers, such as the incubation programmes  implemented by the Hong Kong Science and Technological Parks Corporation, and a move to market the city as a start-up hub by government bodies like InvestHK.

Hong Kong science park said last month it would invest HK$50 million to support technology start-ups in the city.

In April, the city government launched its Enterprise Support Scheme that provides up to HK$10 million (US$1.29 million) in funding to companies for research and development.

Since 2012, the government has been mulling the creation of an innovation and technology bureau. 

Timothy Tong, the president of Hong Kong’s Polytechnic University, has fully endorsed this project to help grow start-ups in the technology sector.

Moves to have such a bureau approved have been delayed several times in recent months and are not expected to get back on track until October at the earliest.