24 October 2018
Hong Kong needs to create its own unique ecosystem for startups, rather than copy the Silicon Valley model. Photo: HKEJ
Hong Kong needs to create its own unique ecosystem for startups, rather than copy the Silicon Valley model. Photo: HKEJ

Creating Hong Kong’s own startup ecosystem

Startups have been on the rise in Hong Kong in recent years.

However, people in industry circles doubt if Hong Kong can be the next Silicon Valley of Asia, given that the city has no comparable ecosystem. In addition, there are significant cultural differences between the East and the West. Hence, there is a view that Hong Kong local startups are destined to fail.

Whenever I hear these arguments, I can’t stop wondering if we can come up with our own unique startup ecosystem.

In the past two years I visited Silicon Valley twice along with officials from the Cyberport Entrepreneurship Centre to meet and exchange ideas with startups.

I have also met with an old friend of mine who has been working in a high-tech company at Silicon Valley for years.

Based on my observations and the insights gained from the trips, I can say that Hong Kong’s failure to establish a startup ecosystem is due to several factors, including the mindset of the general public, educational structure, attitudes of investors and the structure of economy.

I also believe that copying a model directly from Silicon Valley would also not help much. We need to come up with our own unique local startup ecosystem.

Creative industry is in fact a good way to begin with. Though we are not copying everything from the Silicon Valley, there is something valuable that we must bear it in mind: the startup ecosystem should be run as a sustainable cycle.

A graduate from Stanford or Berkeley can obtain support from their alma mater — renting offices for free, securing capital, receiving business training or getting referrals — for setting up business in the Silicon Valley.

Moreover, it is not difficult for students to apply for grants from schools for manufacturing their products, and from time to time they can get assistance from other startups. Successful startup founders are willing to introduce their investors to these newcomers.

In short, the cycle works like this. A startup company grows well after a new round of capital. The founders would then target the company for an initial public offering, or sell the firm to some IT giants.

Either way they will subsequently turn themselves as angel investors, who will then reach out to potential startup founders and make investments in their ventures. This creates another batch of successful startup entrepreneurs.

It is not feasible for Hong Kong universities to supply free offices to alumni. Meanwhile, Hong Kong investors tend to invest in properties which are low-risk and offer high-returns. These are the shortcomings we cannot change in Hong Kong.

In order to create our own local startup ecosystem, we should start with cultivating our own entrepreneurship culture.

If you take a look at successful startups, they employ the right people and provide services which the market needs — at the right time.

In order to nurture this attitude of doing business, my startup founder CEO friends — Erwin Huang from WebOrganic, Kevin Shee from SC Storage, Steven Lam from GoGoVan, Ray Wong from Flyer King — and I have decided to set up a non-profit making organization — TIPS, which will serve as a platform to share business insights with local start-up companies.

TIPS will recruit members publicly starting from this July. People with enthusiasm and potential as startup founders will be selected and will be entitled to assistance from TIPS instructors and consultants in the form of mentorship program.

It remains to be seen if TIPS will work out as planned. But I and my friends are willing to take a little step forward, hoping this will attract more people from the industry to join us.

This article appeared earlier in the writer’s blog.

Translation by Darlie Yiu

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Co-founder and CEO at Innopage Limited

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