Hong Kong’s Science Park may finally be at the point when it can put tax dollars behind good ideas
The truth with start-ups is there’s usually more money than good ideas, but that is a shortage that very few budding entrepreneur would dare to admit.
Another source familiar with [Science Park’s] vetting process said: “There is a feeling that the management is not doing things in the interest of science, but running it as a business, a piece of real estate. -- SCMP, December 4
Good. That is how it should be run. Only by treating the Science Park as a business, has it any hope of stimulating the New Technology ideas our government wants from it.
I recognise that this is contrary to the thinking of most people on the matter. The common notion is that to get technology start-ups, you have to put “seed money” into them to “pump prime” them into a state of “critical mass” for “take-off.” Pardon the mixed metaphors.
The accepted formula says this requires government help in the form of direct subsidy, cheap rents and technical assistance.
We shall let the record of the accepted formula speak for itself. The Science Park has been in existence for 16 years, and at present has about 650 corporate tenants in 21 buildings across a 33 hectare campus. This is a sizeable effort at promoting technology.
Now give me the name of a single big technology success spawned at Science Park. Believe me, if they had one, you would have never gotten their public relations trumpet out of your ears. Think! There has to be at least one, doesn’t there?
Typically, what you find is the sales outlets of foreign digital service providers and gadget producers pretending to be teenie-weenie Hong Kong start-ups. You also get the usual flock of low-tech application writers and biotech companies talking bio-babble that no one really understands.
I have no serious objection to them trying it. I’m a connoisseur of corporate bluster. But it does annoy me sometimes to see academics, whose research we have funded at their universities, take their ideas private at Science Park the moment they foresee any commercial value.
Hey, professor, we paid for that. Pay us back. Asking us to subsidise you some more so that you can keep it all yourself is adding insult to injury.
And now to why I think we should run the Science Park as a business. The big underlying fallacy in the conventional thinking is that there are lots of good commercial technology ideas out there but little money to bring them to fruition.
The truth is exactly the reverse. There is always plenty of money looking for good ideas. The shortage lies in the ideas. Most of them are hopeless non-starters. You won’t get the deluded hopers to admit it, of course, but that is still how it is.
And this is why we have venture capitalists to sort them out. The accepted ratio - even for venture capital - is that only one out of 10 ideas works out, and The One must therefore pay back more than tenfold if the venture capitalist is to remain in business.
People with great ideas do not like this, of course. They all think they have a guaranteed win and they feel cheated when others take the profits of their successes, forgetting that these others also took the losses on the more common failures.
But if they feel hard done by, they can always try to delude their local bureaucrats with dreams about the wonders of the new economy and then get their money through technology subsidies.
What venture capitalists only find difficult, however, is impossible to bureaucrats who deal in rules and procedures, not the vagaries of fortune at the leading edge of new industries. Invariably the bureaucrats favour yesterday’s ideas and get it wrong.
Worse yet, the few people with good ideas are often repelled or crowded out by the whole process of bureaucratic approval. There are cases of it on the record, for example the drone market DJI, which went to Shenzen instead of staying in Hong Kong.
Technology is best fostered as in any other business by rule of law, good infrastructure, sound public administration and low taxes. Giving it subsidies and rent concessions only keeps failures going, when their demise would otherwise leave room for possible successes.
To make Science Park a success, make it a business, a piece of real estate charging market rents. That is how to sort the wheat from the chaff.