…in the Hong Kong startup ecosystem
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 support organisations (coworking spaces, accelerators, consultancies, events) will consolidate.
I say this not to alarm anyone, instead to “add oil”. 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. As the old order crumbles, so shall a new one be created by a combined army of veterans and virgins alike.
There were 4 coworking spaces when I moved to HK a little over 3 years ago. That number is closer to 80 now. This explosion in supply comes at the cost of occupancy rates, that are now below 60% according to my crude estimates. In my first fortnight here, I attended every startup event since there were a grand total of 2 on average every week. Today, you could attend 2 events on average every day. And these are well-attended by any standards, attracting about 40–50 participants each. But, as anyone who’s been around long enough will attest to, the quality of content at these events is nowhere near what HK was and is capable of. The number of (non-government) accelerators/incubators/support programs has gone up from 0 to 8+. Yet these programs are, in most cases, abused by startups jumping from one to the next in search of rent-free space, cloud credits and network connections.
You’re probably shaking your head right now, and I agree that it does not make for pleasant reading. However, above all else, 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 has 3 pillars — people, money and support.
The government and private sector play a crucial, albeit often maligned, role by providing unwavering support. Me, I am a big fan of the ‘white elephant’ Cyberport. Many startups I’ve worked with in the past can hire outstanding consultants or participate in the very best US-based accelerators, thanks to generous reimbursements from Cyberport. Such opportunities are unthinkable in most of Southeast Asia, mind you. This support will only grow with the government committing over HK$2 billion towards innovation and technology.
Besides, where else in Hong Kong can you sit under the sun in a garden with great broadband wifi access and work uninterrupted for hours at a stretch? I know I’ve done that innumerable times.
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 sobriquet of mine to entrepreneurs who lament the availability of capital. I repeat, there is no 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 HK 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 of 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 & investing activity — and you’ve got a great dish cooking here! Regular interaction with stellar startups/entrepreneurs from other geographies is a great way for Hong Kong’s founders to learn from the best.
Which leads me to my next, 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 that is Hong Kong startups.
The first batch of entrepreneurs set out on their arduous journey approximately 6–7 years ago. My understanding is that they are on the edge of a cliff now. Some will fly and become breakout successes, but most will or have already fall(en). And that is not a bad thing! In fact, it’s the greatest blessing for Hong Kong. For these (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 will build on their learnings, insights and in turn be much more sustainable & valuable.
It gladdens my heart to have also seen the influx of talented and experienced entrepreneurs from around the globe. So many of these individuals have gone on to become an integral part of our ecosystem, that you’d mistake them for natives. The perspectives they added to our worldview will stand HK 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.
So, contrary to popular belief, Hong Kong’s startup ecosystem is thriving and on the verge of a major breakthrough. The question is, where do you see yourself fitting into it? How will you leverage the opportunities, learn from the experiences and contribute to the journeys?
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 dialogue 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…]