Here’s a lowdown on five funds launched by the Hong Kong government to boost the city’s startup ecosystem.
The entrepreneurial spirit runs high in Hong Kong. Despite being a small city, Hong Kong is home to leading innovation centers like the Hong Kong Science and Technology Parks Corporation (HKSTP) and Cyberport. It is also the birthplace of startup unicorns such as Artificial Intelligence (AI) company Sensetime, logistics platforms Lalamove and GogoVan, virtual lending platform Welab, and traveling advisory platform Klook, among others.
According to InvestHK Annual Startup Survey, the number of Hong Kong startups rose 28% to 3,360 in 2020, employing over 10,688 people across 116 co-working spaces, incubators, and accelerators. Fintech, e-commerce, and professional consultancy services were the popular sectors, accounting for 35% of all startups.
For startups to thrive, it is instrumental to get the right funding. This allows room for experiments, failure, and improvement on prototype products and business models through trial and error.
Here’s a look at five funding programs initiated by the Hong Kong government to foster the city’s startup ecosystem.
Cyberport’s funding for digital startups
Cyberport is a startup incubator and tech innovation organization managed by the Hong Kong government’s Hong Kong Cyberport Management Company Limited. It offers a range of support programmes to startups in sectors such as Fintech, smart living, AI, blockchain, digital entertainment and esports, and more.
The Cyberport Creative Micro Fund (CCMF) offers a seed funding of HK$100,000 (US$12,882) to aspiring entrepreneurs for kickstarting ideas and developing prototypes and proof of concepts in six months. The fund is best suited for individuals who have not founded a company yet.
The Cyberport Incubation Programme offers step-by-step financial grants to early-stage Hong Kong digital tech companies for growth acceleration. Participants will initially receive HK$100,000 (US$12,882) of Initial Working Capital Grant. Over the next 24 months, they will receive up to HK$400,000 (US$51,529) based on business performances, industrial recognition, potential for expansion, and other assessments.
The programme will also cover expenses on marketing, staffing, business operation, and professional services. Apart from financial assistance, the programme also provides rent-free working space, training, and networking opportunities with industry peers and investors.
Startups like Gogovan, Klook, and Shopline are some of the participants of the Cyberport Incubation Programme, with Gogovan achieving Unicorn status in 2017. The programme is suitable for a slew of digital tech startups, including digital entertainment, gaming, ed-tech, fintech, AI, smart living, and more.
The application is open all year round and is processed every four months. Admission requirements include marketing viability, business scalability, and innovativeness.
Innovation and Technology Fund for Better Living (FBL) for social startups
Established in 2017 by the Innovation and Technology Commission, the Innovation and Technology Fund for Better Living (FBL) supports innovation and technology (I&T) projects in Hong Kong. It is dedicated to improving the well-being of specific community groups and the public with innovative applications of technology, such as developing apps, software, and devices, among others.
With a funding size of HK$500 million (US$64.4 million), FBL can allocate grants up to HK$5 million (US$644,085) to each project or cover 90% of its total eligible costs. This includes testing and certification expenses, production and promotion costs of the project, and external audit fees. FBL, however, does not cover rent or general administration fees.
So far, approved projects include smart living home, deep learning technology for Dyslexia, AI for personalized stroke rehabilitation, and interactive therapeutic music program for elderly with cognitive impairment. Many of these projects were co-organized by NGOs, social startups, and universities in Hong Kong, which received grants to the tune of HK$3-5 million (US$386,000-$643,800).
Application is open all year round and welcomes any aspiring social entrepreneurs to enhance the environment, health, education, and daily living of Hong Kong citizens with ground-breaking technology.
SME Export Marketing Fund (EMF) for exposure
Administered by the Trade and Industry Department of Hong Kong, the EMF aims to subsidize and facilitate export promotion activities of registered SMEs and startups to venture into foreign markets. If the startup aims for expansion outside of Hong Kong, the EMF may be a suitable choice.
The scope of EMF is quite comprehensive. For trade exhibitions and business missions held outside HK, EMF will cover rental and design fees of exhibition booths, as well as the travel and hotel accommodation expenses of employees. Additional costs incurred in digital marketing campaigns, online trade exhibitions, printed publications, and website enhancements will also be covered.
Each application grants at most HK$100,000 (US$12,876) or covers 50% of the total expenditure of one promotional activity. There is no limit on the number of applications by an enterprise, but the cumulative limit will be HK$800,000 (US$103,008).
Funding will be distributed through reimbursement or a combination of initial or final payments. As of June 2021, the EMF had received over 300,000 applications and approved over HK$4 billion (US$515 million) worth of funds.
Creative Smart Initiative (CSI) for startups in creative industries
In 2009, the Hong Kong government poured HK$300 million (US$38.6 million) into CSI in a bid to facilitate the development of creative industries in Hong Kong and build the city into Asia’s creative capital. It is aimed at nurturing talents, fostering creativity, and assisting startups in the fields of architecture, advertising, design, digital entertainment, music, television, and publishing.
Financial grant is disbursed through installments. For a project of HK$1.5 million (US$193,150), CSI will cover 66% (HK$1 million or US$128,766) of expenses. While CSI also welcomes the application of re-run projects, the new amount will not exceed that of the previous funding.
According to CreateHK and Hong Kong Design Centre(HKDC) Job Report 2020, CSI has funded 567 projects worth HK$1.78 billion (US$229 million), which won 120 international awards. CSI has benefitted 3,940 SMEs and facilitated the creation of 71,800 startups. It also played a role in developing the Design Incubation Programme in HKDC, nurturing 236 design and fashion startups such as Ponderer Limited and Klockwise.
In the 2021-22 budget announcement, the government said that it will further inject HK$1 billion (US$129 million) into CSI. Related funds for creative industries include DesignSmart Initiative (DSI), Film Development Fund (FDF), and the Film Guarantee Fund (FGF) for design and film sectors respectively.
Funding Scheme for Youth Entrepreneurship in Greater Bay Area (GBA)
The Hong Kong government also encourages the younger generation in the city to seek out economic opportunities in the Greater Bay Area (GBA), the future innovation and technology hub of China. The GBA already houses China’s Silicon Valley Shenzhen.
Introduced in March 2019, the Funding Scheme for Youth Entrepreneurship in GBA is part of the Youth Development Fund rolled out by the Youth Development Commission. The scheme offers a slew of NGO-led youth entrepreneurial programmes, such as the Supportive Scheme for Young Startup Pioneer in GBA from the Hong Kong Federation of Youth Groups. Another example is the Youth Entrepreneurship Empowerment (YEE) programme from Tung Wah Group of Hospitals.
These programmes offer many ancillary measures and incubation services to prospective Hong Kong startups, including seed funding up to HK$600,000 (US$77,258). It also offers professional consultation, business networking opportunities, entrepreneurial guidance, and market and supply chain development services.
Hong Kong Permanent Residents, between 18-40 years of age, who are interested in entrepreneurship, are eligible for the scheme. Freshly registered startups that have been operating for three years or less are also eligible. It welcomes projects on smart living, AI, big data, fintech, blockchain, creative industries, culture and education, and social entrepreneurship.
16 notable NGOs have joined in organizing entrepreneurial projects, including the Hong Kong General Chamber of Young Entrepreneurs, Po Leung Kuk, and Hong Kong tertiary institutions such as the Chinese University of Hong Kong (CUHK), and University of Hong Kong (HKU).
Aspiring entrepreneurs should be aware of several factors when applying for funds, such as eligibility, funding period, application deadlines, and whether double funding is allowed. Several funds such as CSI and CCMF does not cover projects already supported by other government funds. As opposed, GBA funding schemes tend to be more flexible.
Several funds may invite applicants for interviews or business pitches to see if public money is put into the right hands. Showing passion, confidence, and great market insights of your business model can help in getting the funds. Be ready to experiment, accept criticisms, and pivot when necessary. While funds do not guarantee success, it can help understand whether an idea will work or not.