GoGoVan, a Hong Kong app-based transport service for freight and goods, is merging with mainland-based 58 Suyun, the freight business unit of multi-category services platform 58 Home. The transaction has drawn much attention in startup circles.
In an interview with StartUpBeat of the Hong Kong Economic Journal (HKEJ), Francis Fong Po-kiu, honorary chairman of the Hong Kong Information Technology Federation, discusses some of the challenges GoGoVan may encounter and other developments in the innovation and technology industries in Hong Kong and the mainland.
Here are excerpts from that interview:
HKEJ: One of our startups now stands a good chance of becoming a “unicorn” (an unlisted startup which carries a valuation of over US$1 billion). What do you think about this?
Fong: Given the stringent listing rules, the startup, even though it is a unicorn, still has a number of hurdles to clear before it can become a public firm.
To successfully list, not only do they have to achieve certain financial results, they also need to keep proper accounting records to qualify for listing.
Nonetheless, successful startups do have lots of options, not just seeking an IPO. Getting acquired is one of them.
HKEJ: If GoGoVan is listed on the main board of the local bourse, what would be the implications?
Fong: Judging from its size and profitability, it’s not difficult for the merged firm to get listed on the main board.
Listing in either the Growth Enterprise Market or the Main Board of the Stock Exchange of Hong Kong requires clear accounts.
If entrepreneurs have a plan to get listed, from the start, they have to separate personal finance and that of their companies clearly. Try to use big accounting firms once the business has grown to a certain size, because listing requires a lot of different kinds of expertise, like how to deal with banks and the Securities and Futures Commission.
HKEJ: I have heard GoGoVan runs quite well in Hong Kong, and 58 Suyun is in cooperation with one million drivers in mainland China. The merged operation seems to be quite attractive, isn’t it?
Fong: I think the two firms are a great match. I heard GoGoVan is doing quite well in foreign markets such as Southeast Asia, but not in the mainland market. By contrast, 58 Suyun has been thriving in China but has difficulty in setting up businesses overseas. The two are highly complementary.
The combined firm will enjoy certain advantages. For example, the new firm will find it easier to receive capital, and it would be easier for them to expand into other businesses.
But once listed, there would be a need to disclose more information about the company. The decision-making process may thus take more time, rendering the firm less nimble than when it’s a startup.
Note: The views expressed in this interview are personal opinions of the resource person and do not necessarily reflect those of HKEJ.
This article appeared in the Hong Kong Economic Journal on Sept 1
Translation by Jonathan Chong
[Chinese version 中文版]
For a complete video interview, please visit http://startupbeat.hkej.com/?p=49525
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