Lai See | Should Hong Kong introduce tax breaks for start-up investors?
Taxiwise, a Hong Kong start-up company with a taxi-booking app, was sold last week. The firm that bought it - Ikky - has not disclosed the price which is believed to be north of seven figures, but an interesting aspect of the deal is that the firm that invested in the company about six months ago and helped it get in shape - incubated it - made a return of 22 times its investment.
That's an arresting business proposition by any standards. But the company, Bigcolors, has been making waves in the Hong Kong start-up scene over the past year.
Taxiwise was the first company Bigcolors has since invested in under its new format, but there are other projects in the pipeline. It is looking for investors to increase its ability to invest in more companies. "The idea is to buy into companies, grow them, make them successful and sell them," Giancotti says.
It's an approach that has appealed to the bankers who have invested in Bigcolors. Giancotti says they see this as their ticket out of banking where they have may have worked for many years and are looking to do something different. It particularly appeals to bankers who have made their money already and "want to help build businesses and be remembered for doing something cool rather than working in a bank all their lives."
Although this highlights the interest in start-ups, Giancotti is uncertain over the prospects for crowdfunding in Hong Kong, saying it would need education and pro-crowdfunding legislation. At present only so-called professional investors as defined under the Securities and Futures Ordinance are allowed to buy equity in start-ups over a crowdfunding platform. Investors are required to have assets of HK$8 million with revenue of about HK$2 million a year, and must also be conversant with the risks of investing in start-ups. Over the past year, crowdfunding legislation enabling retail investors to invest in start-up equity over crowdfunding platforms, has been passed in the US, Britain, much of Scandinavia, and Italy among others. But it's unlikely to happen in Hong Kong soon.