Serial entrepreneurs could play a bigger role in nurturing local entrepreneurship, following the example of Silicon Valley, according to a top venture capital executive
Conrad Tsang, chairman of the Hong Kong Venture Capital and Private Equity Association (HKVCA), said Hong Kong serial entrepreneurs likely started their business in their 20s before the dotcom bubble burst in 2000.
They survived the tough days and became investors in the current wave of entrepreneurship, Tsang told EJ Insight in an exclusive interview.
“Many active Hong Kong venture capital and private equity investors were serial entrepreneurs,” he said. “Their experiences are very precious… a coaching model could be very helpful [for Hong Kong’s young generation of entrepreneurs]”.
Complaints about angel investors being too conservative about local start-ups are not new. Some observers said large organizations still prefer to acquire relatively mature firms rather than take risks to help grow smaller ones.
“Hong Kong should not stop at being a PE hub. It should also be a VC hub,” Tsang said.
Hong Kong-based companies managed about one-fifth of private equity funds in Asia at the end of September last year. Together with their counterparts in mainland China, they control more than 60 percent of these funds, according to government data.
Tsang said the scale and frequency of communication between experienced serial entrepreneurs and the younger generation in Hong Kong are far from enough and the government’s limited support policy is another issue.
However, Tsang is confident Hong Kong can catch up quickly, given its advantages of free flow of information and large numbers of PE/VCs.
In addition, he said he has seen evidence that the government is “stepping up efforts to promote the start-up sector”, such as the proposed establishment of an innovation and technology bureau.
On Monday, Hong Kong Financial Secretary John Tsang told the Asia Private Equity Forum that the government is about to extend the profits tax exemption for offshore funds to private equity funds to attract overseas funds.
He said other measures such as mutual recognition of funds between the mainland and Hong Kong are pending approval.
Consumer-related sectors will be in the spotlight in the coming years amid China’s economic restructuring, Conrad Tsang said.
The transition to a consumption-driven economy from an export and manufacturing-oriented model could bring positive results in the long run.
There is no need to overemphasize economic growth data, he said.
China’s gross domestic product growth slowed to a 24-year low of 7.4 percent last year.
In the short term, investors will be looking more closely at medical, healthcare, education, financial services, among other high-end service sectors, as China’s per-capita GDP approaches a historic US$8,000.
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