A woman takes a photo of sailing boats on Victoria Harbour in Hong Kong on July 22, 2022. (ISAAC LAWRENCE / AFP)
Hong Kong remains a magnet for global venture capital with the support of the government’s targeted measures and the national development strategy, though geopolitical tensions and financial uncertainties weigh on local markets, business professionals and officials said on Thursday.
Sun Dong, secretary for innovation, technology and industry, said during a forum that the amount of venture capital investment in Hong Kong’s innovation and technology sector has increased to about HK$42 billion ($5.35 billion) in 2021, and startups in several communities have attracted over HK$18 billion in investment in the last financial year.
The venture capital investment was only HK$1.24 billion in 2014, according to the Hong Kong government.
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“Innovation is a key driver to economic growth amid geopolitical uncertainties and raising interest rates around the world,” the technology secretary said.
There was “a big drop (of 60 percent) earlier this year from the first quarter to the second quarter, but in the third quarter, (venture capital investment) is actually going a little bit higher” from a quarter earlier, said Irene Chu, head of new economy and life sciences of KPMG China
Irene Chu, head of new economy and life sciences of KPMG China, said the venture capital inflow in Hong Kong has stabilized in recent months. There was “a big drop (of 60 percent) earlier this year from the first quarter to the second quarter, but in the third quarter, (venture capital investment) is actually going a little bit higher” from a quarter earlier, she said.
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Chu remains upbeat about Hong Kong’s status as an international fundraising hub, given the Guangdong-Hong Kong-Macao Greater Bay Area plan and the Northern Metropolis Development Strategy. The latter, formulated by the special administrative region government, aims to evolve into a comprehensive I&T ecosystem neighboring Shenzhen.
Thomas Tsao, founding partner at Gobi Partners, said the Greater Bay Area has bred 63 unicorns within a couple of years, which is “the fastest growing startup ecosystem in China”. A unicorn is defined as a startup with a value of over $1 billion.
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Philip Hu, founding member and managing director of Primavera Capital, noted that nearly 70 percent of fundraising on the Hong Kong Stock Exchange between July and September was for new economy industries, such as healthcare, hi-technology and biotech.
Co-founder of AngelHub Karena Belin said that in the coming year, venture capital investors will increase their appetite for investment in the environmental, social and governance, fintech, and Web3 sectors.
The business leaders were speaking at the Cyberport Venture Capital Forum 2022, themed “Thriving in the Dynamic: Refocusing for Growth”. The hybrid event — held online and with in-person attendees — kicked off on Thursday at Cyberport, and provides a setting for investors and startup leaders to explore opportunities for partnerships.
More than 2,500 participants, including venture capitalists, enterprise investors, family offices and entrepreneurs, are attending the two-day forum.
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Simon Chan Sai-ming, chairman of Hong Kong Cyberport Management Co, said the Cyberport saw the birth of two unicorns last year — new additions to four established unicorns — and now there are over 1,800 startups in total.
“The Cyberport Macro Fund has injected a total of HK$170 million into 23 startups, and attracted over HK$1.55 billion of co-investment, achieving an investment ratio of about 1 to 9,” he said.
Established in 2004, Cyberport is a government-funded park for incubating startups with subsidies, space and marketing support provided.
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