Hong Kong has historically been known for its entrepreneurial spirit. Even today, 90% of all companies that call it home are small- and medium-sized enterprises (SMEs). In recent years, the number of tech start-ups has surged. For years, local and expatriate residents in the SAR have been leaving the corporate world’s comforts to work for themselves. This has become a defining trend within Hong Kong and many are hailing this market as the Silicon Valley of the East.

 

This may be the case in several ways but more needs to be done before Hong Kong can match its Western counterpart in terms of money invested. The average size of investments made by venture capital (VC) firms in Hong Kong technology start-ups topped US$6 million in the first half of this 2014, versus US$4 million for the whole of 2013 . However, VC funding in technology in California’s Silicon Valley surpassed US$1 billion each quarter since the second quarter of 2009. 

 

To lessen the gap, local VC firms and the Hong Kong government have teamed up. This support is not limited to adding more money to the pot—it also comes in the form of providing mentorship, administrative support, office space and networking opportunities.

 

Turning an idea or a dream into an autonomous, profitable start-up is not easy and entrepreneurs in Hong Kong are facing a particular business landscape. Mainly, the financial and banking industries have been relatively stable and incredibly financially successful, so it can be difficult to get the average investor to consider investing money in start-ups with returns that may take more time to materialize.  This is partly why 88% of the 612 entrepreneurs surveyed by the Centre for Entrepreneurship and Google Hong Kong in Chinese University were mainly self-funded, and for 50% it was the only funding they had. 

 

Budding entrepreneurs also find that they get little support from their family and friends. According to the same study, entrepreneurs said pressure from family and friends increased 39% and 436% respectively after their enrolment into start-up-related programmes.  Not only are entrepreneurs starved for funds but they often also lacking a support network and safety net from an inner circle.

 

Local VC firms and the Hong Kong government are tackling this issue on both ends by providing a support platform, mentorship, and in some cases, capital so that start-ups become more likely to succeed.

 

On the financing side, the HK government provides a Small Entrepreneur Research Assistant Programme (SERAP) for pre-venture-capital companies. SERAP can provide up to HK$6 million on a dollar-to-dollar matching basis and the programme has, so far, been a success: As of September 2014, SERAP approved almost 400 projects for a total of HK$470 million in funding , and the SERAP programme will be enhanced in 2015 when the funding ceiling for each project is increased to HK$10 million.

 

Capital is the blood in start-ups’ veins but even the most funded start-up will fail if it does not have a well-developed brain: A sound business plan and the strategy to execute it. This is why mentorship, advice and networking opportunities are so important.

 

As such, the Hong Kong government and VC firms applaud private businesses’ initiative to help the Hong Kong start-up ecosystem flourish. These include the Financial Technology Innovation Lab and Accelerator Programme (a joint programme among Accenture, HSBC, UBS and Morgan Stanley), Swire Properties’ B2B incubation centre and programme  and AIA’s accelerator programme.  Each programme is different but they all afford the entrepreneurs the chance to meet with like-minded people, be mentored and receive free workspace.

 

The growth in services and businesses that support start-ups in Hong Kong has been nothing short of spectacular: There has been a 300% growth in the territory's physical infrastructure and services since 2008!  And there is room for a lot more growth. With the needed funds and the right advice, start-ups in Hong Kong can help to further bolster Hong Kong as a leading hub for tech companies in Asia and eventually aim to challenge giant tech start-up locations like the Silicon Valley.