The conversation starts with reference to a recent article published in the South China Morning Post written by Petty Sito and Julie Zhang on how the quasi-governmental body known as InvestHK is now helping local companies grow overseas after focusing on attracting investment to the city for the past 25 years.
The article mentions that the Evident Group, operator of a digital investment platform for alternative assets and licensed by the Securities and Futures Commission, formed a partnership with Zand Bank, the UAE’s first fully licensed digital bank. The collaboration will provide the Dubai-based bank’s clients with investment opportunities through Evident’s tokenization technology and infrastructure.
Yet, is that enough when places like Singapore, Taiwan, and Israel long ago seemed to have learned how to nurture and scale up startups to go global? Our guests today believe that an empowered, well-resourced startup-centric body is a good idea, one that will require public and private partnerships to make it happen.
The crux of the discussion is what can be done to improve Hong Kong’s startup ecosystem? More pointedly, what can be done to help up-and-coming companies reach their potential and possibly become the juggernauts of tomorrow? Indications are that it will require a separate entity offering genuine startup support, something beyond InvestHK, Cyberport, Science Park, or the Hong Kong Trade Development Council.
David kicks things off, sharing his thoughts on the legal and compliance challenges that startups face in the Special Administrative Region with Regulatory Ramblings host Ajay Shamdasani. They discuss how to effectively serve as a lawyer for a startup when they don't have much of a legal budget. In such instances, perhaps fractional or part-time in-house counsel might be more suited to a firm’s means and needs.
Yet, beyond legal considerations, other mistakes do startups make, such as running out of money too soon, seem like a cliché at this point. David shares his perspective on what can be done to improve the city's ecosystem for startups and stresses that legal expenses should be seen as an investment in a firm’s future rather than costly, burdensome drudgery.
The discussion then shifts to Musheer and Joshua in the second segment. They stress that looking objectively at the SAR’s existing structure of InvestHK, Cyberport, and Science Park, and without being overly critical of what has come before, though past government actions – mistakes have been made and, hopefully, lessons have been learned. Even still, they ask, what would need to be done to create a proper startup support entity?
As Musheer notes, something distinct from either Cyberport or HKSTP is needed: “more of an internal InvestHK with a main [key performance indicator] of building and sustaining [a] local ecosystem.”
They both emphasize that the hallmark of a strong startup ecosystem is the strength of its community. “They need bank account access, government subsidies, and both local and international business ties,” Musheer said.
In a similar vein, Joshua added: “Is the community open to it [startups]? Hong Kong can be very myopic, with everyone doing their own thing. Early-stage funding in here is weak. How do we fix that?”
Both men cited examples from around the world that have been successful, including private-public partnerships, incubators like Hong Kong’s WHub, and university grants for startups – all of which Hong Kong has.
“The pain points in Hong Kong are that it is rich in tech and ideas, but you need many people for startups to thrive; a critical mass of consumers. They need a pool of consumers ready to be excited about product launches. Then look at how incubators can pitch to select committees,” Joshua said.
Both experts conclude that the city needs not only investors, but also mentors and a nurturing, open-minded community with support systems. That includes non-financial operational support for local startups in Hong Kong, with adequate communication and partnerships, and angel investors who can help with coordinating matters.
Culture and mindset are a key part of the equation. The local startup scene needs local angel advisers because, as Joshua observes, “the Hong Kong business environment is too Asian, too formulaic and math-based. We need some element of [creative] strategy.”
Infrastructure issues are also a concern. For example, the city’s Cyberport and Science Park could use better transportation, they say, because both locations are far away from the core business districts of Central, Admiralty, and Wanchai. Beyond that, both say the city has great facilities that can help bring innovative companies together.
“What’s needed is more facilitation of commercialization,” Musheer said.
The ultimate question is whether private enterprises can collaborate with the government to develop more effective business strategies. See less -
