Hong Kong pledges more capital for local start-ups

Paul Chan, Hong Kong's financial secretary, announced in his annual budget statement that HKD 600m would be injected into the HKSTPC Venture Fund, taking the vehicle's total assets to HKD 1bn. In addition, HKSTPC will fold its existing accelerator programme into a newly established co-acceleration programme featuring other partners. This will receive HKD 110m in funding.

Cyberport, meanwhile, has been invited to launch a dedicated incubation programme for smart living start-ups under the government's broader smart city and digital economy initiative. The programme will receive initial funding of HKD 265m and issue grants of up to HKD 500,000 to approximately 90 start-ups per year over a five-year period. The start-ups will also receive professional support.

HKSTP Venture Fund was established in 2015 and has made 27 investments to date. Across the entire programme, HKD 18 of private investment has been attracted for every HKD 1 of government money put to work. Portfolio companies include ACT Genomics, Lalamove, HiFiBio Therapeutics, Belun, Fano Labs, and Geek+.

HKSTP's accelerator was set up the same year and participating start-ups have gone on to raise more than USD 400m in funding. During the 12 months ended March 2022, the aggregate value of start-ups supported by the programme grew by more than 250% while third-party investment rose 100%.

The government released a blueprint last December for innovation and technology (I&T) development. Goals include enhancing the I&T ecosystem and promoting "new industrialisation"; enlarging the I&T talent pool; promoting digital economy and smart city development; and leveraging Hong Kong's position as a bridge between mainland China and international markets.

Among the specific recommendations, there is a reference to diversifying venture financing channels to support start-up development. The government's HKD 2bn Innovation & Technology Venture Fund, established in 2017 to match investments made by private sector partners, HKSTPC and Cyberport, and the HKD 5bn strategic tech fund are all mentioned.

The strategic tech fund was announced last year and the government said it would invite HKSTPC and Cyberport to identify potential investees.

The fund is part of the Hong Kong Growth Portfolio (HKGP), a 10% allocation within the Future Fund for investments that support the local economy. Since then, governance and investment committees have been set up to oversee the HKGP and eight private equity firms have been appointed – but not publicly named – to deploy the capital.

The Future Fund was established in 2016 to invest budget surpluses to cover future liabilities arising from an ageing population and slower economic growth. It is held within the Hong Kong Monetary Authority's (HKMA) Exchange Fund, which is tasked with affecting the exchange value of the Hong Kong dollar to maintain monetary and financial system stability.

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• Topics
• Greater China
• Technology
• Fundraising
• Early-stage
• Hong Kong (China)
• Hong Kong Monetary Authority (HKMA)
• Cyberport
• HKSTPC
• seed