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Startups are engines of growth

November 11, 2014


Financial Secretary John Tsang

Hong Kong is a successful business hub. Our financial sector, our trade and logistics sector, our business services sectors are strong. We also want to develop new innovative and creative sectors to add value to our economy, create additional opportunities for our people and bring a better quality of life to our society as a whole.


Startups, with their relentless passion towards creating a better world, are the engines of economic and social progress. They bring inspiration, innovation, ideas, talented people and technology to our economy.


Over the past several years and, in particular, last year, the startup scene in Hong Kong has gained huge momentum, growing rapidly through the concerted efforts of many of you here today.


These include initiatives being launched by various stakeholders in the business ecosystem which includes entrepreneurs, government, corporations, universities and investors, all of whom are passionate about contributing to the future development of innovation-driven entrepreneurship.


This momentum is gathering steam when it comes to funding startups with an improvement in early-stage funding since 2010. As a nascent startup ecosystem, Hong Kong has certain gaps in funding, we recognise that, but we are working hard to fill these gaps.


The angel investment scene, for example, is a fairly recent phenomenon in Hong Kong, and we recognise that it is an important component towards building up a vibrant startup ecosystem, and we are growing it.


Startup investment gains traction

In addition to the two associations, the Hong Kong Business Angel Network and the Hong Kong Venture Capital Association, there are several family offices and private angel investors, such as Fresco Capital, MindFund, Red Chapel, Arbor Ventures, TCG Capital, Outblaze and Bigcolors which are investing increasingly in Hong Kong-based seed to early-stage ventures. Syndicated group investing is also gaining traction.


The more established local family funds have so far invested primarily in startups in Israel, Mainland China and Silicon Valley. Our hope is that with more innovative and scalable startups and ventures in Hong Kong, these family funds will find investing in Hong Kong-based startups a rewarding experience.


Hong Kong has also seen an increasing number of private incubators and accelerators spring up. Nest, Accenture's financial technology innovation lab, and government-funded facilities, such as Hong Kong Science & Technology Parks and Cyberport, have soft landing and incubation programmes for startups.


Corporate developments welcome

New facilities from multinational corporations are welcome developments. Swire Properties soft-launched its B2B tech incubator called "blueprint" only yesterday; KPMG is planning to launch a data analytics innovation lab in Hong Kong soon, and of course, the number of co-work spaces continues to climb to well over 30.


While far from reaching escape velocity, the number of venture deals within Hong Kong reflects an encouraging upward trend on an annualised basis, and 2014 is expected to exceed the previous year in terms of numbers of consummated venture deals according to the Hong Kong Venture Capital & Private Equity Association. Its published figures record investment sizes ranging from US$30,000 to US$50 million in funding rounds.


The momentum and goodwill are both astonishing and continuing to build at a fairly good pace. Just like the multiple startup events happening this week – more than 40 in total, and I do hope that you could catch at least some of them.


Vibrant startup scene

Various startup communities and venues in Hong Kong, such as the co-work spaces, hold regular sessions or workshops that allow entrepreneurs to exchange practical experience.


It is, indeed, a perfect time to host these activities this week so that everyone can catch up with the developments of the startup community here and get the latest information about Hong Kong's startup scene.


I hope you enjoy all these events, especially today's forum, and find them useful when starting or growing your business or investing in someone else's business in our city. We are all here for you, particularly our people from Invest Hong Kong, which provides a one-stop service platform for overseas startup entrepreneurs setting up in our city.


Last but not least, I would like to congratulate the 14 winners. You have been judged the best from among 550 entries from 47 economies. I look forward to your innovative ideas, and wish you all every success here in Hong Kong.


Financial Secretary John Tsang gave this address at the StartmeupHK Venture Forum 2014 organised by Invest Hong Kong at the Kowloonbay International Trade & Exhibition Centre.