Hong Kong to launch $256m fund to invest alongside VCs
The Hong Kong government will create a HK$2 billion ($256 million) fund that will co-invest in start-ups alongside venture capital funds on a matching basis. It is one of a number of initiatives intended to bolster innovation and technology in the territory.
The fund was announced by Hong Kong Chief Executive C.Y. Leung in his 2016 policy address. A further HK$200 million will be used to establish a Cyberport Macro Fund for investment in information and communication technology (ICT) start-ups, while HK$500 million will go towards a fund that finances projects that make use of innovation and technology to improve local people's daily lives.
In addition, the Innovation & Technology Bureau - set up to coordinate work between universities, the Science Park, Cyberport, and R&D centers - will also be awarded HK$2 billion to support research projects.
Hong Kong's ambitions to become a "smart city" are similar to those of Singapore. Indeed, matching funds are already used in Singapore, with the National Research Foundation into the third installment of its Early Stage Venture Fund (ESVF) program, which matches outside commitments to funds on a 1:1 basis.
"The new venture fund policy is a significant step towards supporting the entrepreneurial ecosystem that is positioned to flourish over the next decade. This is a very exciting time for the Hong Kong start-up community," said Melissa Guzy, chairman of the Hong Kong Venture Capital & Private Equity Association's venture committee.
The policy address notes that Cyberport has nurtured more than 160 start-ups over the last 10 years, offering working space at concessionary rates with flexible tenancy terms. Meanwhile, the number of co-working locations operations by the business sector has grown to more than 40, up from just a few six years ago. Around 1,600 start-ups occupy these incubation and co-working locations.
The government will continue to support the Science Park and Cyberport, with the latter set to increase incubation scheme quotas and establish new clusters in areas such as financial technology and e-commerce.
Venture capital investment in Hong Kong reached $131 million in 2015, according to AVCJ Research, up from $74 million in 2014.
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