FIN­TECH

In the Startup Spot­light

Asia Outlook - - Contents - Writer: Tom Wad­low

Why en­trepreneurs should look to Hong Kong

Hong Kong is of­fi­cially the fifth eas­i­est place to do busi­ness in the world. Ac­cord­ing to the World Bank's Ease of Do­ing Busi­ness rank­ings, it is the third best place in the world to start a busi­ness, backed up by the fact that around 150,000 new com­pa­nies reg­is­ter there ev­ery year.

This is de­spite Hong Kong's soar­ing of­fice space costs. In cen­tral

HK, a square foot of space cost a com­pany $306, 30 per­cent more than the sec­ond most ex­pen­sive area, Lon­don's West End. How­ever, the rise of co-work­ing spa­ces is help­ing to al­le­vi­ate this cost pres­sure, and many other fac­tors also help to off­set this po­ten­tial bar­rier to en­try in Hong Kong.

One com­pany that has suc­cess­fully es­tab­lished it­self is Neat, a dig­i­tal bank­ing startup which aims to elim­i­nate bar­ri­ers for smaller en­ter­prises look­ing to set up in Hong Kong. Its CEO and Co‐Founder David Rosa took time to an­swer our ques­tions.

Asia Out­look (AO): In­tro­duce me to Neat. How did you come to start the com­pany in 2016?

David Rosa, CEO and Co‐Founder of dig­i­tal bank­ing startup Neat, of­fers his take on the in­creas­ingly vi­brant en­tre­pre­neur­ial scene in

Hong Kong

David Rosa (DR): As a con­sumer, I felt very frus­trated with the bank­ing ex­pe­ri­ence of­fered by lo­cal banks.

The on­line bank­ing plat­forms were not user friendly and I of­ten had to visit the branch to get things done. Com­ing from the in­dus­try and work­ing at Citi for many years, I was also aware of the chal­lenges large banks face when try­ing re­vamp their sys­tems. There­fore, I saw a big op­por­tu­nity to start some­thing from scratch.

We started off with a con­sumer prod­uct, which has gained a lot of trac­tion with en­trepreneurs, ex­pats and trav­ellers. As a nat­u­ral ex­ten­sion of this, we've now also launched a busi­ness prod­uct that al­lows busi­nesses to open a cur­rent ac­count on­line very eas­ily.

AO: How big a prob­lem or chal­lenge is ex­tend­ing bank­ing ser­vices to small busi­nesses in Asia. How does Neat help tackle this is­sue?

DR: When we think of de­vel­oped mar­kets, and es­pe­cially fi­nan­cial cen­tres such as Hong Kong, the term “un­banked” may not im­me­di­ately come to mind. And while it's true that con­sumers in the city are rel­a­tively well served by the tra­di­tional banks, star­tups and small busi­nesses are not. For tra­di­tional banks, small busi­nesses are an un­prof­itable cus­tomer seg­ment and there­fore banks make it dif­fi­cult to open and ex­pen­sive to main­tain bank ac­counts for small com­pa­nies.

In fact, the prob­lem is so big that it is driv­ing en­trepreneurs away from

the city and they in­cor­po­rate their com­pa­nies else­where. With Neat Busi­ness, we are solv­ing this prob­lem by of­fer­ing an al­ter­na­tive to a tra­di­tional cor­po­rate bank ac­count. The ac­count can be opened on­line, from around the world, and we wel­come star­tups to sign up for our ser­vice.

AO: What is your take on Hong Kong’s startup scene? Is it vi­brant?

DR: When I started my first com­pany, the startup scene in Hong Kong was still in its in­fancy, but in the last few years it has ex­ploded. New co-work­ing spa­ces are open­ing ev­ery month and more and more ac­cel­er­a­tors and startup events are pop­ping up. Ac­cess to lo­cal fund­ing is im­prov­ing as well and more global VC money is flow­ing into the city. For star­tups in their early stages fundrais­ing re­mains chal­leng­ing, but for star­tups in their growth stage all the way to IPO, there is plenty of fund­ing avail­able. We’re also def­i­nitely notic­ing an in­creased in­ter­est from re­cent univer­sity grad­u­ates to join startup com­pa­nies, which is a very promis­ing sign for the fu­ture.

AO: Like­wise, how does Neat help bud­ding en­trepreneurs set up in Hong Kong?

DR: Set­ting up a com­pany in Hong Kong is straight­for­ward and fast. En­trepreneurs can do it them­selves, but there are also plenty of agen­cies that can help with the setup. The en­tire process is quick and in­ex­pen­sive. How­ever, the next prob­lem en­trepreneurs face is open­ing a cor­po­rate bank ac­count. This re­quires fly­ing all di­rec­tors and share­hold­ers to Hong Kong, vis­it­ing a bank branch, and then wait­ing for months to get an ac­count opened.

With Neat Busi­ness, this process has been sim­pli­fied tremen­dously. Com­pa­nies can ap­ply on­line in 15 min­utes and get their ac­count up and run­ning in a mat­ter of days. The prod­uct of­fers all fea­tures that new com­pa­nies need, such as re­ceiv­ing pay­ments, pay­ing sup­pli­ers and em­ploy­ees and us­ing MASTERCARDS to pay for travel or on­line sub­scrip­tions.

AO: How easy is it to set up busi­ness in HK? What are some of the ad­van­tages ver­sus other Asian na­tions?

DR: It is very easy to set up a com­pany in Hong Kong. It can be done in a few days and there is no need to fly to Hong Kong in per­son. There are fees to be paid, but we're talk­ing about a few hun­dred USD, very low com­pared to some other Asian coun­tries.

An­other ma­jor ad­van­tage is that there is no need for a lo­cal di­rec­tor or share­holder, which makes it easy for for­eign­ers to set up a com­pany. In ad­di­tion, Hong Kong's cor­po­rate taxes are low and the ju­di­cial sys­tem is very strong.

Peo­ple of­ten don't re­alise that Hong Kong is in fact the sec­ond mar­ket in the world – af­ter the UK – when it comes to the num­ber of com­pany in­cor­po­ra­tions per year. Over 150,000 new com­pa­nies are set up in Hong Kong each year. That's a huge mar­ket.

AO: How do you en­vis­age the mix of for­eign and lo­cal star­tups evolv­ing over the com­ing years? Is there a healthy bal­ance at the mo­ment?

DR: At Neat, we value di­ver­sity im­mensely. Our team alone con­sists of more than 10 dif­fer­ent na­tion­al­i­ties. I be­lieve this is very im­por­tant for any startup that wants to be suc­cess­ful and tar­get Hong Kong as well as the global mar­ket. Gen­er­ally, within Hong Kong there is def­i­nitely a good mix of for­eign and lo­cal en­trepreneurs. Uni­ver­si­ties within the city are also in­creas­ingly start­ing to en­cour­age en­trepreneur­ship. Most have en­trepreneur­ship clubs and cen­tres to sup­port bud­ding en­trepreneurs. I can only see the startup scene grow­ing over the com­ing years. AO: How im­por­tant are trends like the rise of co-work­ing spa­ces to the growth of star­tups in Hong Kong?

DR: One of the main chal­lenges of do­ing busi­ness in Hong Kong is high rent. Co-work­ing spa­ces are a great so­lu­tion as rent­ing a (hot) desk in a cowork­ing space makes it af­ford­able for new star­tups to get started.

AO: Are there any other key trends, for ex­am­ple with tech­nol­ogy, that are also en­cour­ag­ing com­pa­nies to the city?

DR: With Shen­zhen, the world's global fac­tory, just around the cor­ner, Hong Kong is also an ex­cel­lent place for star­tups that need to man­u­fac­ture prod­ucts. The rise of IOT will likely at­tract more com­pa­nies to the city. In ad­di­tion, Hong Kong is a great hub to ship prod­ucts glob­ally so it's also a great base for the grow­ing ecom­merce in­dus­try.

AO: What are your am­bi­tions for Neat over the next year or so? DR: Our mis­sion is to make the lives

David Rosa, CEO and Co-Founder

“We started offffffffff with a con­sumer prod­uct, which has gained a lot of trac­tion with en­trepreneurs...”

“When I started my first com­pany, the startup scene in Hong Kong was still in its in­fancy, but in the last few years it has ex­ploded”

Neat Co-founders, Igor Wos and David Rosa

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