Bootstrapping Hong Kong’s Startup Community

It seems like there are a few re-occurring themes that pop up when talking about HK becoming a known startup location, and why people don’t see it happening.

  • HK will never be Silicon Valley:
    • Personally, I’m not understanding why everyone is stuck on this. It may not be possible to have the exact options of funding or resources, but I think there are also certain resources that we have which no one else does. (More on that in a minute).
  • There are no superstar entrepreneurs/developers/advisors:
    • So, in that case, all successful companies are started with all of this in place already? Just like trying to grow a business, bootstrapping it all the way, I think we can build up a good community of both local resources and pull in ones from overseas. 
  • The government doesn’t do enough for startups: 
    • Does your mom still tuck you in bed each night too? The government has put together a lot of good, but limited programs to help startups. I think having the ability to offset half of my legal costs, marketing costs, and hiring recent grads is a pretty good deal that I’m not finding in many other places. I do think that this needs to be backed up with a more accessible pool of investment that understands what a startup company is about to be more effective. But, that doesn’t have anything to do with the government.
  • People prefer to do X and not be in a startup:
    • Ha, I think this is actually an upside of a poor economy along side the movement of a lot of the more traditional trade related jobs heading north to over the border. Just give it a year or two to kick in, how many people really want to commute to the factory every day or to be stationed up there for the whole week if there are alternatives that don’t require that. There is a void that is being created by the reduction of jobs that are stationed here that I think will create an opportunity for those that see it. 
  • Hong Kong has a very low entrepreneurship rate:
    • This is very true. I think that this is probably due to the lack of pressure to find a good position over the last 30-40 years. In the last generation’s time, those who are the parents of the current generation of 20-30 somethings, it was very easy to find a reasonable job. Now, it is becoming more difficult, and I think it will continue to get worse. Why would there be a need for many entrepreneurs in an economy that is so driven by outside demand? But, as new people come into the workforce and do not find it as easy as they thought, being an entrepreneur becomes a more viable option. 
  • Without VC money, there will never be huge rockstar companies coming up:
    • If I have the choice of making ten smaller, sustainable companies, or one huge hype machine of a company, I would choose the smaller ones. It is possible for the smaller ones to grow and be successful, but the hype machine has a high chance of very spectacularly crashing and burning. OK, so there isn’t a lot of chance for big money deals here, but I think if we can develop a resource for seed funding or micro-funding, then we’ve got a good foundation to grow from there. 
  • Hong Kong people don’t collaborate about their business:
    • Yep, this is true to some extent, but I think it may be that it is a lack of some community that gives the trust to collaborate. The local HK toy factory owners have a regular lunch meeting to catch up and collaborate. These are the last generation, ones that grew the factories from small businesses to where they employ hundreds or thousands of workers. In order to grow, many times they relied on their competitors to help with overflow of work. 
    • If a strong community that is growing and thriving defines that they are open and that this is one of the attributes that defines the community, then others will follow by example. 

Anyhow, I hope this doesn’t come across as a rant. I hope it to be a start of another conversation of what people see the prospects are for growing a startup community here in Hong Kong. 

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Comments

  1. I think its not entirely accurate to say that HK’ers are not entrepreneurial. If entrepreneurship is viewed in a narrow sense of starting a company, shopping around for VC money and seeking an “exit” then sure, Silicon Valley beats HK, but look around HK at all the small businesses, traders, restaurants, courier companies, garbage collectors, dai pai dongs etc and you see the entrepreneurial spirit alive and well in HK (and everyone here works extremely hard/long hours).Another point is the process of setting up a company and the ongoing burden of running it and paying low taxes is a great plus for HK.Enjoying the blog, keep it up.

  2. Jonathan Buford says:

    I believe and agree with everything you just said, but that isn’t the issue at stake. Based on a few different reports that I’ve read, HK lags behind all other countries in Asia and the rest of the world to varying degrees in the percentage of number of new ventures. One report published by CUHK, “Innovation Policy and High Growth Startups” by Kevin Au, et al. focused on this and their basic recommendation is to increase the incentives for starting new ventures. Just like you said, I believe that entrepreneurial endeavors are quite natural here, but I think it has been stunted by too much easy money and this weird property market.

  3. I believe it will take time to establish the ecosystem around startups and new ventures in HK. The nature of the city and the people make me think that there is huge potential here.

  4. Agree with that said of the weird property market. With property market rising 30% this year, who would take the risk to invest in startups when they have a much safer but still substantial return on properties! 

  5. Jonathan Buford says:

    Another aspect of the investment issue that I’ve come across is that many people are not using their own money to invest but are using family money. It is difficult to explain to Baba that it is a three year investment that is extremely risky when the same cash can be put into property that they understand.