Hong Kong — The Birth Of A Startup Community

Bjorn Dawson
Nov 24, 2015 · 7 min read
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With an average of eight unicorns born each year (companies worth over $1B) throughout each of the past 10 years, it’s no surprise that startups are becoming much more common as entrepreneurs strive to create the next Facebook, Uber or Xiaomi. This increased interest in entrepreneurship has sparked the creation of startup communities around the world, and Hong Kong might be next.

Throughout the past year and a half, I have become fully immersed in the vibrant startup community in Waterloo. With a population of only about 550,000, more than 1,850 startups have been founded in Waterloo in the past 5 years alone making it the most dense startup region after Silicon Valley. More than $650 million in investment has been raised by local companies including VidYard, Thalmic Labs, and Aeryon Labs, and we now have our own unicorn, Kik Messenger.

Drawing upon my experiences in the Waterloo startup ecosystem, I moved to Hong Kong with my company, Grobo, for two months and this is what I observed about its startup ecosystem:

1. Hong Kong Is The New World Center

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Majority of Asia is within a 5 hour flight from Hong Kong

Once a British colony, Hong Kong has since become a financial hub that connects Asia and the Western World. With a large population of expats living in Hong Kong, this English speaking region provides companies with the ability to easily land and establish operations in Asia. In fact, half of the global population lives within only a few hours flight from Hong Kong, making it an ideal launch pad for Asian operations. This often under served population presents a market opportunity that is much larger than the contiguous US, which has traditionally served as the global target market, especially for Canadian companies.

The most obvious opportunities for startups in Hong Kong reside in the FinTech space, however the proximity of Hong Kong to Shenzhen, the hardware manufacturing capital of the world, makes it an ideal location for hardware companies. As hardware further decentralizes, Hong Kong still provides quick access to other Chinese cities as well as to Taiwan. If you can move past the insanely high cost of housing, the ease with which companies can operate in Hong Kong is impressive, and the energy in the city is simply infectious.

2. Community Building Is In Full Swing

Hong Kong currently has the opportunity to mimic this culture, although it will be slightly more challenging due to the larger population size and the resulting less intimate environment. As every local organization fine tunes their value proposition, it is clear that community building has begun. Government programs such as Science Park and CyberPort already provide critical first grants and free office space to pre-seed companies in a similar manner to Velocity and Communitech in Waterloo. Accelerators and incubators can walk companies through their early stages, while key groups including the Hong Kong Kairos Society and StartupsHK can build the necessary mentorship and support networks between entrepreneurs. Although certain rifts already exist between stakeholders, the tension should ease with time. Furthermore, as we have learned in Waterloo, the roles of each stakeholder will be ever-evolving to match the needs of the startups, but a strong foundation is currently in the works.

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An amazing networking dinner hosted by the Hong Kong Kairos Society

3. Talent Is A Potential Roadblock

Connecting young talent with both experienced talent and a strong network of mentors is the other half of the equation. The experience that these individuals provide helps companies move faster while making fewer mistakes, which is crucial for cash strapped startups. In Waterloo, for example, BlackBerry is largely responsible for the current network of mentors. At its prime, BlackBerry was recruiting many extremely talented professionals from around the world, however due to recent downsizing, many of those individuals are now mentoring startups, and some have even created their own.

4. Funding Is Available (But Must Be Unlocked)

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Luxury cars are everywhere in Hong Kong!

It goes without saying that adequate funding is a requirement for launching a startup. Government grants provide critical injections of funding at the earliest stages, which allow companies to develop their technology, to pinpoint the problem they are solving, and to make mistakes early on. The Canadian government currently does a great job of providing support and funding to early stage ventures (~$60–80K CAD) through various grants and government programs.

The Hong Kong government has also done a good job of providing this funding to companies early on. When combined with their extremely favourable tax laws, starting a company in Hong Kong is attractive from a financial perspective, with the exception of high real estate costs. Where Hong Kong has an advantage is in the seed funding stage, which is often filled by Angel Investors. With a strong network of high net worth expats and locals, including a high number of family offices, there is money available for startups. The catch, however, is that this money is often destined towards more traditional investments such as real estate, and this current generation of entrepreneurs will need to convince the investors to begin investing in startups. If these entrepreneurs are successful, Hong Kong’s ability to fund startups will be the envy of many, including Canada, where seed stage funding is currently lacking.

5. Fast Paced Culture

Conclusion

Bonus: Hong Kong Is Beautiful

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Man Cheung Po Infinity Pool

It’s easy to understand why people move to Hong Kong and never leave. The energy of the city, the amazing food, and the diversity of people you meet are all huge draws. The beauty of the city itself, however, might just be the biggest draw. The city, with its amazing skyline, is actually built around a tree-covered mountain known as The Peak, and with Hong Kong’s amazing public transit system, you are always close to beautiful hikes and pristine beaches. I highly recommend hiking Dragon’s Back and visiting the Man Cheung Po Infinity Pool (Tip: Hike it in the rain so it’s all yours to enjoy!) the next time you visit Hong Kong.

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Big Wave Bay at the end of the Dragon’s Back hike

Kairos Society Hong Kong

The official blog of the Hong Kong chapter of the Kairos…

Bjorn Dawson

Written by

CEO/Co-Founder @GroboInc and Mechanical Engineer who loves entrepreneurship, growing delicious food, and looking at life from a different perspective.

Kairos Society Hong Kong

The official blog of the Hong Kong chapter of the Kairos Society

Bjorn Dawson

Written by

CEO/Co-Founder @GroboInc and Mechanical Engineer who loves entrepreneurship, growing delicious food, and looking at life from a different perspective.

Kairos Society Hong Kong

The official blog of the Hong Kong chapter of the Kairos Society

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