Moving to Hong Kong offers startups several advantages owing to the special government policies and the location of the city. China’s government has been paving the way for startups and foreign businesses since the setting up of the Special Economic Zones in the 1980s. Hong Kong was one of the first few free economies in the region and since has grown manifold to become an important startup hub in the region today. Here is a quick guide to help you understand the startup ecosystem in Hong Kong and what the driving forces behind it are.
Hong Kong has been a preferred choice for close to 1,500 business giants to set up regional headquarters making it an important business destination in Asia. Hong Kong’s GDP of $430 billion comes from the various thriving industries like tourism, trading and logistics, financial services, and producer and professional services. Move to Hong Kong to be a part of the 7.4 million population that can be described as a hustling and supportive crowd.
Hong Kong is one of the new members to be featured in the Global Startup Ecosystem Report 2018 by Startup Genome and is a growing wellspring of talent and investors. The startup ecosystem is valued at $2.2 billion and boasts of an early stage funding of $202 k on an average per startup. The growing startup ecosystem has also helped in shaping a sustainable jobs market which has resulted in several startup job seekers also moving to Hong Kong.
What Does Hong Kong have in Store for Startups?
Hong Kong has been evolving since the setting of the SEZs in the region and has gone through multiple policy changes to bring its status as a fertile business location up by several notches. The establishment of more than 2000 startups in the city and increasing support from the government is a clear indicator that moving to Hong Kong can help entrepreneurs access a lot of high-value startup resources in the city. The city has a proclivity for technology-based startups over any other niche, and the same is evident as most of the policies mentioned above and funding programs are directed at different tech startups in Hong Kong.
Hong Kong’s Government Leaves No Stone Unturned for Supporting Startups
The local government bodies in Hong Kong have a series of funding and support programs to encourage more entrepreneurial activities in the region. Let us throw light on some of these programs.
The Technology Business Incubation program runs in support by the Hong Kong Science and Technology Parks Corporation has been set up to help disruptive business ideas to grow into flourishing startups. The incubator program has helped close to 600 incubatees so far with its services and support in areas like technical and management assistance, office space, promotion and development assistance, and even financial aid depending on the duration of the incubation program.
Another notable initiative is the Innovation and Technology Fund for Better Living, a $63 million (HK$500) fund for helping tech startups in Hong Kong that offer innovative products and services to make day-to-day life more convenient.
Entrepreneurs moving to Hong Kong can also rely on the newly launched Trade and Industrial Organisation Support Fund (TSF). This fund is the joining of the already helpful SME Development Fund (SDF) and other important support programs for SMEs in the city to create a significant place for themselves in their respective industries.
Startups in Hong Kong don’t have Any Dearth of Funding
Overcoming the hurdle of lack of funds is not difficult in Hong Kong for entrepreneurs provided they have an innovative business idea that can shake up the market. The vast network of angel investors, venture capital, and private equity firms has helped hundreds of startups launch successfully. The angel investors’ community itself comprises of 6000 members while there more than 15 large venture capital funds with high funding abilities. Entrepreneurs moving to Hong Kong can also rely on the various platforms that have been set up to help investors and startups connect for not just getting monetary help but also guidance and other support. Venture Investors Alliance of Hong Kong, Hong Kong Venture Capital & Private Equity Association, Hong Kong Angel Investment Network, and the Hong Kong Business Angel Network are some of these platforms. These associations have events and gatherings regularly to help find the right ideas to find funding and grow with the city’s startup ecosystem.
Move to Hong Kong to Grow with an Enterprising Startup Community
The startup community in Hong Kong is characterized by the several support services that have been put out there to help its ecosystem grow. Entrepreneurs, startups, and startup job seekers moving to Hong Kong have a lot of resources in the form of non-government startup clubs and associations. These bodies aid in streamlining business ideas and offer assistance in different ways to help the various players in Hong Kong’s startup ecosystem. Key clubs and associations that are shaping the entrepreneurial culture in Hong Kong are the AAMA Pearl River Delta Chapter, DEEPTECK, Internet Society Hong Kong, and TIE among the several others.
The ecosystem’s success is also growing manifold due to the contribution of Startup Genome members like InvestHK, Hong Kong Science and Technology Parks Corporation, and Cyberport who are cultivating a robust business environment. Other ecosystem partners include Hong Kong Fintech, the Hong Kong Polytechnic University, brinc, and StartupsHK.
Hong Kong’s Advanced Technology Based Startup Sector
China has always been at the forefront when it comes to technological innovations, inventions, and readiness. Cities like Beijing and Hong Kong boast of some of the most innovative tech startups. Investments in Hong Kong amounted to more than $1 billion, and the total funding received in 2016 was 11 times more than the investments made since 2012. The government staunchly supports tech-driven innovations and has shown unparalleled support to the startups moving to Hong Kong. Let us look at some of the soaring sub-sectors in the tech niche.
A Booming Fintech Sector in Hong Kong
A strong financial sector in Hong Kong has helped fintech startups in Hong Kong find a strong foundation to launch their services and products primarily for the B2B companies. With more than 100 banks functioning in the city, B2B startups whose products and services are targeted at banks and affiliated institutions can find a strong customer base in Hong Kong. The increasing fintech activities in the city has also resulted in the establishment of accelerators like DBS Accelerator, SuperCharger, and Accenture’s Fintech Innovation Lab. Startups like TNG Wallet, WeLab, CompareAsia Group, and Futu5 have been in the spotlight in the recent funding rounds with investments of $120M(Series A), $220 million (Series B+), $50 million ( Series B), and $145 million (Series C) respectively. As per the Hong Kong Cyberport, there are more than 200 fintech startups in Hong Kong. 27% of the total funds in the ecosystem was brought in by the fintech sub-sector.
The Steadily Growing Healthtech Sector in Hong Kong
The healthcare system of Hong Kong stands out in comparison to other healthcare systems around the world for being highly digitized. Segments like biotech are growing steadily with increased funds in the health tech sector. IDS Medical Systems Group is one of the notable startups in this sub-sector which raised $60 million through private equity in 2017. Another notable funding round is that of Prenetics which raised $40 million in the same year in Series B round of funding.
Consumer Electronics Startups in Hong Kong
Hong Kong’s proximity to Shenzen paired with the regional advantages offers the city access to startups and organizations that provide excellent product development services along with manufacturing talent and resources. The presence of the Mills Business incubator, Brinc Global IoT Accelerator, and Readwrite Labs Hong Kong have made for themselves a reputable place in Hong Kong’s startup ecosystem by helping fintech startups in the city grow offering support in various forms. The sub-sector is further strengthened by events like Startup Launchpad which is a prominent hardware trade show in the region.
Hong Kong strategic location in the center of Asia makes it a quintessential business destination as it is well connected with the rest of the world. For business ventures looking for a city that can help them access the Chinese markets, moving to Hong Kong would be ideal as the city has direct access to Shenzen, the global hardware capital and to the other important regions in mainland China. Tech-based startups are likely to find success in Hong Kong as the city is a global leader in introducing innovative products and services and is a fast-growing economy.