One important sector of Hong Kong's economy is financial services and banks serve as intermediaries in financial transactions. Hong Kong itself has big fiscal reserves and Government has a long list of financial support programmes, from Research and Development Cash Rebate to Patent Application Grant. In September 2017, it launched the Innovation and Technology Venture Fund (ITVF) with a view not to generating revenue but to stimulating private investment in local innovation and technology startups.
The need for ITVF reflects a gap in the funding of innovation and technology startups in Hong Kong. ITVF invites any venture capital funds to co-invest with the passive Government partner in Hong Kong innovation and technology startups at an overall matching investment ratio of approximately 2:1 - as a risk control measure. In addition to investment links with Hong Kong, Hong Kong's co-investment partner must have a minimum remaining committed capital of HK$120 million.
Individual startups might be disappointed as they cannot act creatively by making direct applications and investment proposals themselves. If they want venture capital fund allocation into them from any sources, I believe they have to go back to the basics by thinking through their business models, execution plans and financials. They should have a better chance if their concept and energy are focused on the high-growth segments of the right technology and industry eg blockchained-backed fintech, in my view.
The investment horizon of innovation and technology is not short and the any project commitment must be full. While Government might be generous with the money, Hong Kong startup entrepreneurs should make the most of their effort and time to uplift themselves. I believe with the right value, capacity and support, Hong Kong's innovation and technology ecosystem is growing smart!