Tsang earmarks HK$50m to fund start-ups

Financial Secretar y John Tsang on Wednesday proposed to invest HK$50 million to set up a corporate venture fund to help finance local start-ups.

In the 2015-16 Budget speech presented at the Legislative Council, Tsang said the fund, to be managed by Hong Kong Science and Technology Parks Corporation (HKSTPC), would invest in start-ups located in the Hong Kong Science Park or those that had previously participated in HKSTPC-organized incubation programs.

The government also wants to provide assistance to social enterprises and creative industries to promote diversified development, Tsang said.

“A new wave of entrepreneurship, in the form of start-ups, is emerging around the world,” Tsang said. “Last few years saw a notable burgeoning of startups in Hong Kong,” he added.

Tsang said investors from around the world are showing a growing interest in investing in Hong Kong start-ups.

“International IT giants such as Microsoft have set up offices here to look for new businesses that are worth investing in. Start-ups nurtured by HKSTPC and Cyberport have also attracted hundreds of millions of dollars of investment,” he said.

Deputy Commissioner for Innovation and Technology Johann Wong Chung-yan conceded that private investment in start-ups has remained small. Private investors, Wong said, are usually more astute in picking winners than government officials. “We hope that more private investment can come in (to provide financial support for the start-ups),” he said.

Wong said that most new enterprises have higher risk of failure than the well-established ones with proven track records. But he said that the matching investment of the proposed fund could help mitigate the risks to private-sector investors.

“Through the form of coinvestment, risk of private investors can be dispersed and reduced,” Wong said.

Zheng Yanfeng, a professor at the Faculty of Business and Economics of University of Hong Kong, said the “matching” arrangement could save the government time in reviewing the viability of the applicants’ businesses.

Much of the assessment is expected to be done by the private investors who would then provide the government with recommendations, Zheng said.

Although Hong Kong enjoys many advantages in attracting start-ups, it is lacking in technological talents, Zheng said. More important, he said, is that the entrepreneurial passion among the younger generation of Hong Kong people seems to be fizzling out in recent years.

“The matter of entrepreneurship is not just about providing support from the high level. It is also important to encourage entrepreneurship from the bottom, to increase Hong Kong young people’s enthusiasm in starting their own businesses,” Zheng said.

In addition to the proposal of establishing the new fund, the SAR government has said it would like to expand and enhance its Microfinance Scheme and set up a steering committee to study how to further develop Hong Kong into a financial technology hub.