Hong Kong: land of the unicorn?
Hong Kong, long recognised as a major commerce hub, is now providing the perfect conditions for hot-housing new tech start-ups, and it’s encouraging a new class of business traveller to fly in.
The number of start-ups in Hong Kong has been increasing at pace – up 46 per cent year on year in 2015 against 2014. Similarly, there has been a 56 per cent increase in the number of employees in Hong Kong who identify themselves as working for a start-up.
So what is Hong Kong’s magic formula? It benefits from the financing opportunities the city offers, as well as proximity to China’s silicon valley across the border in the cities of the Pearl River Delta. Hong Kong is becoming a great place to engage with or invest in fintech pioneers and no end of other ‘disruptive’ types.
Government initiatives are playing a part, but the city offers one key benefit. ‘Asian investors in Hong Kong and mainland China prefer to invest internationally in products that take their cash and park it overseas,’ says Michelle Buultjens, brand strategy and communications at Blueprint, a B2B tech accelerator and co-working space launched by Swire Properties.
But while angel investors and their high disposable income have been a driving force for people to set up here, that does come at a cost to idea-rich, cash-poor propositions – Hong Kong is not a cheap place to set up shop.
Palapal is a tech start-up working on a platform that allows solo travellers of the same sex to club together to take advantage of discounts, as well as to travel safer. It’s aimed at the local and Chinese student market. Palapal’s founding partner appreciates ‘the ease of setting up a business and the access to capital.’ However, he adds: ‘There are obstacles, like high costs and limited office space.’
Palapal pays rent as resident in Blueprint’s co-working space. Imagine co-working as an extension of hot-desking, where start-ups occupy a space of their own with others but without paying for a full office at Hong Kong business rental rates. Just over a year ago, eight such spaces existed in Hong Kong. Now there are more than 40.
As the entrepreneurs move in, so too has a range of schemes to help. Starting from a low base, there are now more than 20 local funding initiatives – and this too is facilitating the city’s burgeoning role as a start-up hot house.
Blueprint’s accelerator programme selects projects with a compelling vision, creative business model – and potential for growth. Buultjens explains, that unlike conventional venture capital firms, Blueprint does not take a stake in the business. It does provide dedicated co-working office space and mentors from within the Swire business portfolio – including Cathay Pacific. ‘Our ability to leverage existing business resources for the gain of our start-ups allows us to stay close to innovation that could provide us with a competitive advantage in future,’ she says.
Lo says this applies to the city as a whole. ‘Accelerators in Hong Kong are key drivers in incubating the city’s new start-ups,’ he says. And as to the future, one of the milestones will be Hong Kong’s first tech start-up with a US$1bn valuation. Lo adds: ‘We all believe there will be a ‘unicorn’ start-up in Hong Kong soon.’