Hong Kong fintech start-ups seek funding support to beat slump triggered by coronavirus and social unrest
- Fallout from coronavirus and social unrest has pushed fintech start-ups to trim headcounts, halt research and innovation
- Fintech association has asked government to speed up financial aid and waive other measures in current downturn
The fintech Association of Hong Kong, which represents 350 industry players, wants authorities to ease the funding eligibility criteria for three programmes, as well as quicken the approval process to one month from current three to six months, chairman Henri Arslanian said.
Like most businesses, the city’s fintech start-ups that rely on selling their solutions in the Chinese market are facing a survival shock. The viral outbreak since January has deepened the slowdown in the world’s second largest economy, and threatened Hong Kong’s ability to rebound from a recession.
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The association last week wrote to James Lau, secretary for financial services and the treasury, to relax the funding criteria on two programmes under the Innovation and Technology Fund, and one under the Hong Kong Productivity Council, that support private sector R&D efforts.
These programmes are applicable for use in hiring additional headcounts, reimbursing R&D expenditure, investing in software and hardware, or funding marketing expenses incurred from participation in trade fairs.
The Hong Kong government has allocated more than HK$100 billion (US$12.8 billion) in the past three years to support the development of innovation and technology, Financial Secretary Paul Chan Mo-po said his Budget speech last month. This included a HK$10 billion infusion into the Innovation and Technology Fund.
Apart from seeking a speedier disbursal of financial aid, the association is also hoping that the government could temporarily waive the requirement that the start-ups match the official funding with their own capital, Arslanian said.
FinFabrik, a blockchain start-up of 15 people which offers a platform for asset managers and their investors to trade and settle private assets digitally, has to cut cost by up to 40 per cent this year primarily on payroll.
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“Before the virus, we have won a contract to provide our blockchain solutions to one provincial government in China,” said Florian Spiegl, co-founder and chief operating officer. “With all projects on hold now, some of our engineering and talents from overseas decided to leave Hong Kong.”
Some peers have already had to reduce their headcounts, suspend research and development or gone out of business, according to Spiegl. The authorities can help alleviate the hardship because “every little helps” at this juncture, he added.
Victor Lang, co-founder and chief operating officer at Gini, which offers a mobile app for users to track their spending and manage various bank accounts, said faster disbursement of funding could allow start-ups to focus on R&D during the current downtime.
“When the market turns around in the second half this year, we would then in a better place to execute on our plan and reach our addressable market,” he said.
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