I have a thesis about the immediate future of Hong Kong’s startup ecosystem– we are at an inflection point. The next 18–24 months are going to be crucial. Some startups will break away from the clutter, most will fold; some entrepreneurs will succeed, most will fail. The many supporting organisations – coworking spaces, accelerators, consultancies, and events – will consolidate.
I say this not to alarm anyone, but to push everyone to “add oil” and keep working at it. This is a time for introspection, education and collaboration. My belief is that we must not lose our optimism and zeal for entrepreneurship – we are only stronger for it.
There were 4 coworking spaces when I moved to Hong Kong a little over 3 years ago. That number is close to 80 now. This explosion in supply comes at the cost of occupancy rates that are now below 60% according to my crude estimates. Back then, there were about 2 startup events per week, and now there are about 2 per day. They attract about 40–50 participants each, but the quality of content at these events is nowhere near what Hong Kong was and is capable of. The number of (non-government) accelerators / incubators / supporting programs has gone up from 0 to 8+. Yet these programs are, in most cases, abused by startups which jump from one to another in search of rent-free spaces, cloud credits and network connections.
These numbers prove Hong Kong’s insatiable appetite for entrepreneurship. And that is the hope I’m hitching my wagon to. There is tremendous scope for growth here, and we can (must?) all contribute to it.
Every robust startup ecosystem is supported by 3 pillars – support, money and people.
The government and private sector plays a crucial, albeit often maligned, role by providing unwavering support. I am a big fan of the ‘white elephant’ Cyberport. Many startups I have worked with can hire outstanding consultants and participate in the very best US-based accelerators, thanks to the generous reimbursements from Cyberport. Such opportunities are almost too good to be true in most of Southeast Asia, mind you. This support will only grow as the government committing over HK$2 billion towards innovation and technology.
Interest from private sector behemoths is only increasing. This is a boon to the ecosystem at large as corporates are desirable customers and potential exit opportunities. The rush of
corporate accelerators will in due time lead to more nuanced methods of interaction such as blended innovation studios or venture investing arms.
There’s an Indian saying: “dhoondne se toh bhagwan bhi milte hain”, which means that “if you look hard enough you can even find God.” This has been an oft-repeated phrase for me to entrepreneurs who lament the availability of capital. There is never dearth of capital in Hong Kong.
While we must defer to Singapore as the hub of pure VC activity in Southeast Asia, the number of VC firms in Hong Kong has grown in the past 2–3 years. And this is only trending upwards. Those of us in the thick of business hear of at least one new venture fund/angel investor on a weekly basis.
The likes of moneylenders-in-the-guise-of-venture-capital and commission-for-an-email-introduction, which there are quite a few here, should be feeling the heat right about now.
An interesting aspect of this new crop of VC firms in Hong Kong is that they are picking a niche to target, such as connected hardware, blockchain or even broader artificial intelligence. Add to that, their global outlook and investing activity — and you’ve got a great dish cooking here!
Which leads me to my last and most important resource – the human kind. Warm bodies in the ecosystem contribute as entrepreneurs, mentors and employees. The beating heart, you and I, must support each other,
thereby enabling flow of blood through the organism – the Hong Kong startups.
The first batch of entrepreneurs set out on their arduous journey approximately 6–7 years ago. Some will fly and become breakout successes, but most will or have already fall(en). It’s actually the greatest blessing for Hong Kong. The (failed) entrepreneurs will go on to become amazing mentors and share their invaluable experience with the next generation. Many of them will start new businesses that build on their learnings, insights and in turn be much more sustainable and valuable.
It gladdens my heart to see the influx of talented and experienced entrepreneurs from around the globe. The perspectives they add to our worldview will stand Hong Kong in good stead for years to come.
The promise of China may have lured them (expat entrepreneurs) here, but the passion of Hong Kong connects them to this land and the people here.
Contrary to popular beliefs, Hong Kong’s startup ecosystem is thriving and on the verge of a major breakthrough. How will you leverage the opportunities, learn from the experiences and contribute to the journey?
My aim of sharing these thoughts is to spur YOU to take charge and follow your dreams. If there’s one state, one quality and one mindset I believe in, they are action, ambition and optimism.
The Bollywood aficionado in me wants to leave you with this quote from one of my all-time favourite movies, that I hope you will take to heart just as I have:
“Main udna chahta hoon Naina, daudna chahta hoon, girna bhi chahta hoon, bas rukna nahin chahta…”
[I want to fly Naina (character name), I want to run, I want to fall even, but I just don’t want to stop…]