Exclusive | Hong Kong issues equity crowdfunding licence to AngelHub in boost to fintech ambitions, start-ups
- Retail investors will not be allowed on company’s platform
- Only about 5 per cent of start-ups that apply to the platform will be introduced to investors, CEO says
Hong Kong’s Securities and Futures Commission is doing its bit to ensure the city’s regulatory environment is in line with international standards and welcoming for financial technology companies.
This month, it issued two licences to AngelHub, an equity crowdfunding operator, that allow it to offer securities trading and advisory services.
Its co-founder and chief executive, Karen Contet Farzam, told the South China Morning Post the licences were important to her company – as well as the start-up environment in Hong Kong.
“Hong Kong has been an ideal market for start-ups as it is close to other Asia-Pacific countries, while it is an international market itself. The Greater Bay Area offers a lot of business opportunities – it just needs a platform to match investors with start-ups. The SFC licences will make it happen,” she said in an interview.
Hong Kong, however, is not known for start-up funding. “We are here to make a change – for Hong Kong investors to access the unicorns of tomorrow,” she added.
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The licences issued to AngelHub restrict it to working with professional investors with at least HK$8 million (about US$1 million) in investment assets. Retail investors will not be allowed on the company’s platform.
The commission will not approve each start-up that applies to the platform, but it will cap the number of offerings on it, it said.
The SFC is vetting more applications from other equity crowdfunding platforms, and will consider these on a case-by-case basis, two separate sources told the Post. A commission spokesman declined to comment on the matter.
“Technology is going to be more and more important in our daily lives. AngleHub wants to provide professional investors with opportunities to invest in the early stages of start-ups. These start-ups can also raise funds,” Contet Farzam said. She pointed out that Hong Kong had nine unicorns, the second highest density of such companies per capita after Israel.
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She said AngelHub will charge a commission from investors and start-ups once a deal has been closed. Its staff members will be responsible for due diligence on start-ups, which will need to have a minimum viable product and be based in Asia-Pacific.
Only about 5 per cent of start-ups that apply to the platform will be introduced to investors, she added.
Arthur Chan, director of SagaDigits, a Hong Kong start-up that uses big data to help consumer companies enhance their services, said it would be good for Hong Kong to have its own equity crowdfunding platform.
“It is extremely difficult to get a bank loan when you are a start-up. We needed to go to overseas crowdfunding platforms in mainland China, the US and the UK to raise money. If Hong Kong has its own equity crowdfunding platform, it will be easier for us,” Chan said.
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“However, the cost will be a concern. If the fee charged by the platform is high, it will affect the amount of fundraising. We will also need to wait and see if this new platform can attract many investors,” he added.
The total funds raised through all types of crowdfunding rose by more than 90 times to about US$140 billion between 2011 and 2015, according to a 2017 Hong Kong Legislative Council report. Mainland China, the United States and the United Kingdom were the top three markets.
Hong Kong is the second-largest private equity hub in Asia, with 529 private equity funds managing HK$1.25 trillion, according to Asian Venture Capital Journal.
