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Opportunities abound in HK for fintech start-ups: study

11 Jul '19

3 min read

Pic: Alizila

Opportunities abound in Hong Kong for entrepreneurs in the financial technology sector to establish start-ups, according to a new study from KPMG China and the Alibaba Hong Kong Entrepreneurs Fund (HKEF). But better access to funding for all entrepreneurs is needed if the city is to retain its status as a home for founders in Asia, the researched showed.

The annual ‘Transforming Hong Kong through Entrepreneurship’ study found that two-thirds of entrepreneurs believe the development of financial technology in the city offers the most promise for start-ups, according to a release from Alibaba.

Opinions were mixed, however, when it came to three areas that the Hong Kong government has said are critical to its long-term development: smart-city technologies, artificial intelligence and biotechnology, with 48 per cent, 45 per cent and 36 per cent of those surveyed saying they were positive on these sectors respectively.

The study was based on surveys of 393 Hong Kong-based entrepreneurs and students, interviews with key opinion leaders and analysis of venture-capital funding directed at Hong Kong start-ups.

Both entrepreneurs and students were asked their opinions on purpose, ambition and entrepreneurial mindset, entrepreneur capabilities and the ecosystem as a whole.

The respondents noted that while venture-capital investment in Hong Kong start-ups over the past six years has soared more than 20 times and the average deal size for private venture capital investments has risen more than 35 times, gaps in access to formal sources of funding remain.

That includes private equity, crowd funding, government funding and bank loans, in addition to venture capital. For example, 20 per cent of entrepreneurs polled say they currently use venture capital funding compared to 70 per cent who lean on their own savings to fund their businesses.

Still, 70 per cent of those surveyed said that Hong Kong is a dynamic and vibrant location for start-ups, up from 56 per cent last year. The ease of doing business in Hong Kong is still the city’s major competitive advantage, with its position in Asia and access to funding expected to rise in importance by 2022.

Challenges faced by founders in the city included Hong Kong’s well-known high costs and a lack of support services for companies that have moved beyond early stages of operation to the growth and mature stages.

The recommendations by HKEF and KPMG China in the report include expansion of offerings to better support growth stage and mature stage start-ups by both the government and the business community, prioritising sourcing of formal funding by elevating their financial ambition by founders, accelerating global market entry and engaging mentors throughout the lifecycle. (DS)

Fibre2Fashion News Desk – India