Hong Kong’s tech start-up ecosystem sparking into life after slow start
Last year, the Hong Kong X Technology Fund, for instance, invested almost US$20 million in 18 Hong Kong-based start-ups
Hong Kong’s technology start-up scene may have had a slow start compared with other Asian cities.
The government last year earmarked HK$2 billion (US$256 million) in investments to encourage local innovation and technology start-ups – but those funds have yet to be actually distributed.
Policies to attract human capital as well as private venture capitalists or foreign investors have also lagged.
But there are now strong signs starting to show that a start-up ecosystem is gradually shaping up in the city, as access to available funds increases and some home-grown fledgling firms are already proving successful, despite the lack of government support.
Experts say that may partly be because Hong Kong companies have traditionally been independent with their business operations, while some investors are attracted to the city’s market driven, hands-off approach, viewing some tech firms in Singapore as relying too much on their government’s support.
“Things are improving. The availability of funds has increased and it’s not just Chinese money [coming in] but from other places too,” said Charles Mok Nai-kwong, Legislative Councillor representing the city’s Information Technology Functional Constituency.
Last year, for instance, the Hong Kong X Technology Fund invested almost US$20 million in 18 Hong Kong-based start-ups. The fund is part of the Hong Kong X-Tech Startup Platform built in part by Sequoia Capital China, jointly run by Professor Zexiang Li of the Hong Kong University of Science and Technology and Professor Guanhua Chen of the University of Hong Kong.
“We invested in Hong Kong X for the innovative side of business,” said Chen Shuang, chief executive of China Everbright bank, which has the biggest limited partnership stake in the platform.
“Over time we have discovered Hong Kong was actually a treasure trove with many hidden gems. People didn’t invest in these projects before,” he said.
Earlier this year Ant Financial, an affiliate of Alibaba Group, also announced a strategic partnership with OpenRice, Hong Kong’s most popular online restaurant database and review service after investing in logistics company GoGoVan via its entrepreneurship fund last September.
GoGoVan agreed to a merger with 58 Suyun, the freight business of mainland Chinese online classifieds giant 58 Home, in August creating the city’s first start-up worth more than US$1 billion
Alibaba owns the South China Morning Post.
Hong Kong Financial Secretary Paul Chan Mo-po delivered the city’s budget at the Legislative Council on Wednesday morning, including a massive HK$50 billion set aside to promote innovation and technology development, although its implementation details will again be key to its effectiveness.
“Certainly, government subsidies will increase and given our advantages in the financial markets and human capital, we are likely to catch up and meet international standards,” said Christopher Cheung Wah-fung, a Hong Kong legislator for the financial services sector.
Hong Kong is expected to launch another scheme this year to allow start-ups valued at more than US$1 billion to list shares with different voting rights on the city’s bourse’s main board, which is favoured by technology firms, as they allow founders and certain shareholders to retain more voting rights or dividends than other shareholders.
“Universities in the city actually are very strong in artificial technology, robotics and medicine but the government still needs to encourage funds to invest in these projects,” Everbright’s Chen added. “When everybody is willing to come here to invest, then at that point Hong Kong’s innovative atmosphere will have been officially created.”