Hong Kong is rapidly becoming a high-ranking global startup city. An entrepreneurial buzz is in the air, but we still have a way to go before we match regional rival, Singapore. We looked at the latest data to find out how we’re doing. Here’s theDesk’s quick guide to Hong Kong’s startup ecosystem; where we are and where we need to be.
The big picture
The government’s startmeup.hk agency recently published its 2016 survey. The city’s scene is booming. Data shows a more than 24 percent annual increase in the number of startups. The rise of co-working spaces, offering entrepreneurs a more flexible and affordable way to start and grow their businesses, is a significant factor in this growth.
From the previous year, the number of startup employees increased by 41%. The proportion of local Hong Kong founders also rose, from 50% to 62%.
Most foreign startup founders come from the USA. The UK (13%) and Mainland China (11.7%) rank next, although the number of Mainland Chinese founders fell 8% during the year.
What’s a startup ecosystem anyway?
It’s a good question. The name refers to the annual report from San Francisco-based Compass. The global survey ranks cities across a range of metrics in four stages of development.
According to Compass, Hong Kong is at the early ‘activation’ stage. Cities like Singapore and Tel Aviv have reached maturity.
To move forward, the city must play to its unique strengths. For example, the world-class financial services, excellent infrastructure and our location on the Pearl River Delta all bring special advantage.
But to move to the next level, we must look, learn and implement policies and systems based on international know-how.
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Minding the gaps
Activation is a stage when the ecosystem contains gaps. Chiefly, gaps relating to people, money and policy.
Talent is something the city needs. More technical and entrepreneurial talent, either local and foreign, will help the sector grow further.
Many Hong Kong people still prefer working in large corporations. Starting a business requires certain qualities, and not everyone wants to take the risk.
To attract and retain the people we need, platforms like investhk help foreign and local entrepreneurs get access to information and services. Co-working companies like theDesk can also provide support and expert advice for entrepreneurs.
Read more: The ‘co’ in co-working: theDesk’s inclusive communities
What about investment?
Another gap is funding and investment. According to a report from Startup Genome, the issue is not with Series A or B funding, but with initial seed funding. In short, the money you need to get started.
Singapore has more than twice the proportion of ‘normal” seed round investment compared with Hong Kong. We’re playing catch up with our investment ecosystem.
These days, co-working spaces such as theDesk also provide business advisory services for startups and businesses.
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Changing the way we work
Improved access to co-working spaces is a significant factor in the growth of the city’s startup scene.
The high cost of office space in the city is world-famous. For startups, the long leases, high overheads and poor flexibility mean co-working is fast becoming a preferred option.
Before, people often started their business from home until they could afford a private office. Working from a ‘home office’ has advantages. But space is restricted, and many of us find it isolating.
You need to build a network; to be included in the community. A co-working space provides a place where you can focus on your work, but also have the interactions you need.
Location and professional services are important. But more than anything, people look for a quiet place where they can focus on their work and be connected.