In her first policy address earlier this month, Chief Executive Carrie Lam Cheng Yuet-ngor proposed allocating more resources to innovation and technology. In response, Ironfire Ventures managing partner Richard Chan discussed with StartUpBeat of the Hong Kong Economic Journal his experience in venture capital and his views on future developments in innovation and technology, in Part 2 of a two-part interview.
HKEJ: Whether Hong Kong needs to set up a new stock exchange board allowing weighted voting rights has been much discussed. As an angel investor, what do you think?
Chan: From an investor’s perspective, having one more platform means another exit option for me, which is a good thing. But it all comes down to whether there is enough liquidity and turnover. Otherwise, the result may not be as expected.
Furthermore, the US stock market is noted for its high transparency. Small shareholders have a right to file class action lawsuits against their company if something goes wrong. But if weighted voting right is allowed in Hong Kong, it will be hard to protect the interests of small shareholders.
HKEJ: Considering the number of Hong Kong startups and their capability, do you think that can support a new board?
Chan: The new board is currently divided into two segments: New Board Premium and New Board Pro. The former has requirements similar to those of traditional listed companies, while the latter is similar to China’s new third board, which allows a company valued over HK$20 million to be listed.
What would happen after listing in the new board? Only for vanity? Or can it help improve the company’s operation? If the purpose of listing is to raise funds for expansion, how many local startups are ready for that?
Meanwhile, we should also ask ourselves whether the Hong Kong stock exchange can draw foreign startups to list here.
HKEJ: The government proposed to co-invest, on a matching basis, with venture capital funds in local technology startups. Jack Ma Yun, executive chairman of Alibaba Group, also said that in the future, corporations will have to combine with science. Do you think the proportion of science in startups is becoming more important?
Chan: Let’s recall how the venture capital investments in Silicon Valley started a number of years ago. Back then, large tech companies such as Apple and HP operated with science as their core. After the mobile phone market flourished, they created numerous business opportunities. This is what we call business model innovation.
In the coming five to 10 years, things like artificial intelligence (AI) and life sciences are likely to drive the next stage of technological developments, like the fourth “industrial revolution”.
Since these new industries will be largely based on science, startup founders in the next generation may not necessarily be those young people aged between 18 and early 20s with creativity and execution power, but veteran professional scientific experts.
HKEJ: Scientific research needs a lot of capital. Would big corporations become even bigger?
Chan: We always talk about this. For example, Yahoo was very strong. But 10 years on, we can see how quickly things have changed.
Leading tech firms are huge, but that doesn’t mean they will engulf the whole market. If the market is big enough, these large corporations can act as a platform that facilitates growth of new companies through “vertical development”.
For example, some financial technology startups are partnering with Google, whereas food and beverage startups are working with Facebook.
Note: The views expressed in this interview are the personal opinions of the interviewee and do not necessarily reflect those of HKEJ.
The full article appeared in the Hong Kong Economic Journal on Oct. 20
Translation by Jonathan Chong
[Chinese version 中文版]
For a complete video of the interview, please visit http://startupbeat.hkej.com
– Contact us at [email protected]