Hong Kong’s start-ups gather momentum after SenseTime, GoGoVan and Lalamove
Hong Kong is gradually being recognised as a hub for start-ups, even as entrepreneurs and investors cite a lack of funding and entrenched monopolies as obstacles
Momentum appears to be gathering for Hong Kong entrepreneurs and start-ups, as the city’s technology incubators are begging to make their impact felt, while three early-stage companies raised enough money to increase their valuations to US$1 billion, to reach the so-called unicorn status.
Before the successful fundraising by SenseTime, GoGoVan or Lalamove vaulted into, or close to, the unicorn club, Hong Kong was criticised for being late in embracing the city’s start-ups, compared with mainland China or even other Asian cities.
Singapore had five times as many tech venture capital deals last year than in Hong Kong, according to Pitchbook Data. Hong Kong attracted just over US$1 billion in tech venture capital deals, compared to US$2.2 billion in Singapore.
While a business friendly environment bas been a catalyst for entrepreneurs - it also led to entrenched monopolies, start-up entrepreneurs say, which limit competition and make it difficult for them to make headway.
The city’s government is trying to change that. Chief Executive Carrie Lam Cheng Yuet-ngor outlined major cuts to tax rates amid efforts to expand the innovation and technology sector in her maiden policy speech.“We must develop a high value-added and diversified economy,” she said, adding that Hong Kong had the potential to become the Silicon Valley of Asia.
ICO Investment Club, a cryptocurrency start-up that recently received US$500,000 seed funding from a local venture capital outfit, said GoGoVan and Lalamove’s high profile successes may help change that.
“It will let everybody know that investing into a start-up can actually be a very profitable business,” said ICO’s co-founder David Tang Chun-yat. “This will unlock a lot of invest opportunities for start-ups.”
The government has tried, with varying success, to encourage a start-up culture in Hong Kong including the massive Cyberport development - which counts GoGoVan among its successful alumni of its Cyberport Incubation Programme - now has close to 1,000 companies as part of its community. “This shows that the whole start-up ecosystem has been growing bigger and better over the recent years,” said Lee George Lam, chairman of Cyberport.
But entrepreneurs say the government still falls short compared to regional neighbours. Casey Lau, an investor who founded StartupsHK, a community for Hong Kong’s entrepreneurs, said he too has witnessed a growing acceptance of start-ups - but said government policy had little to do with that. “I’d say we were doing pretty well in a small market with zero help from the government in terms of funding,” he said.
Tang from ICO agrees. “We think that Hong Kong government is doing a lot better than a few years ago in terms of incentive and policy,” Tang said. “But if we compare it to Singapore and mainland China, we cannot say the Hong Kong government is very supportive [of] start-ups.”