Admiring Hong Kong’s distinctive and impressive skyline, decorated with thousands of lights and built against a backdrop of steep mountains, viewers are sure to feel a rush of excitement and wonder what the possibilities are.

Indeed, in addition to being a vibrant global city and a great destination for dreams, Hong Kong is one of the world’s leading financial centers, a hive of entrepreneurship and one of the most favorable places to start a business.

Providing insight into Hong Kong’s thriving startup environment, WHub recently published it Startup Ecosystems White Paper 2018.

Here are some key takeaways.

Hong Kong: a safe haven for newcomers

Although Hong Kong was handed back to China in 1997, after 155 years of British rule, it continues to operate as a Special Administrative Region (SAR), maintaining its own capitalist economy, currency, legal and political system under “one country, two systems” arrangement.

As a free port with a GDP US$341.4 billion (2017), GDP growth of 3.6% (2018), GDP per capita US$48,830 and a low tax rate, Hong Kong provides one of the most business-friendly environments and consistently tops the list as the freest economy in the world.

In addition to being the 2016 connectivity leader and on the doorstep of mainland China, with unrivaled manufacturing capabilities just across the border in Shenzhen, Hong Kong is in the heart of Asia, making rapid expansion and international growth relatively easy. .

U applicationunlike other (offshore) jurisdictions, Hong Kong law allows foreigners and non-residents to be the sole shareholders and directors of a company without having to enter into a partnership with locals to set up a business.

Last but not least, Hong Kong can take a key role in China’s Belt and Road Initiative, also known as the Modern Silk Road, which includes 71 countries, home to 65% of the world’s population, and has huge economic , cultural and political implications through the connection and partnership forged in its development.

Profiling startups in Hong Kong

Although funding, competition, market changes and the high cost of living do create obstacles for young entrepreneurs, the number of startups in Hong Kong continues to grow every year.

Based on 998 startups in 2014, there are more than 2,800 in Hong Kong this year, with the majority being e-commerce (22%), FinTech (12%), software (12%) and advertising (11%) companies.

Currently, six homegrown startup stars have been confirmed as so-called unicorns, defined as privately held startups valued at more than US$1 billion. These companies are SenseTime, WeLab, Lalamove, Tink Labs, BitMEX and Klook.

Companies that have recently ceased to function as private companies through initial public offerings (IPOs) or acquisitions include GoGoVan, Guru Online and Xiaomi, among others.

Initial coin offerings (ICOs), or token sales, are also on the rise. Currently, the US, Singapore and Switzerland are still the most important centers for ICOs, but along with Gibraltar, Malta and Liechtenstein, Hong Kong has also made significant strides in this area.

Companies that have developed tokens include BlockOne, which raised US$4 billion in an ICO, and Spark, with its Zephyr token, which recently launched SparkDex, Hong Kong’s first decentralized cryptocurrency exchange.

Startups on the rise and making headlines include Neat, which offers fintech services such as easily opening a bank account through a dedicated app in less than 10 minutes, and uHoo, which uses technology to create a healthier and safer environment.

The rise of FinTech

Compared to 2016, Hong Kong’s investment in FinTech doubled to US$545.7 million in 2017. Indeed, with approximately 70 of the world’s 100 largest banks operating in Hong Kong, the city has one of the highest concentrations of banking institutions in the world, and entrepreneurs looking to start a FinTech business in Hong Kong are in the right place.

Some of the main reasons why Hong Kong is a FinTech hub come from the fact that Hong Kong connects a wide network of customers and funding opportunities, has a sophisticated technology infrastructure, is the largest financial center in Asia and constantly attracts talent from all over the world.

In addition to FinTech, Hong Kong is also well positioned as a hub for Internet of Things (IoT) and Artificial Intelligence (AI) companies.

Community and support programs

While great ideas, determination and resources are critical to a startup’s success, community builders who build professional and social connections in and with the Hong Kong ecosystem are also important contributors to a startup.

The WHub white paper lists around 100 key community builders, both homegrown and well-known names from other ecosystems such as Silicon Valley, Israel, China and Europe.

In addition to these people, the Hong Kong government recognizes the importance of entrepreneurship and is strengthening programs and organizations to increase resources, activities and visibility. Prominent government organizations include InvestHK, StartMeUpHK and Cyberport, the latter of which can provide accepted incubators with substantial grants and a range of business and professional services.

In addition to government-backed programs, private companies have joined accelerator programs aimed at supporting and training new entrepreneurs. Notable programs include SuperCharger, powered by Standard Chartered Bank, Sprinter, sponsored by HSBC, and ReadWrite Labs, which aims to accelerate the growth of the business of things and has offices in San Francisco, Hong Kong and Shenzhen.

Hong Kong’s startup ecosystem also favors a large number of co-working spaces such as WeWork and Hive, active investors such as Alibaba, Brinc and Nest, and a significant number of chambers of commerce.

Over the horizon

WHub’s white paper provides an insightful look at Hong Kong’s startup ecosystem. It is a must-read for any budding entrepreneur considering Hong Kong as a place to start a business.

In order for a startup to thrive, it naturally needs to be nurtured in a healthy ecosystem, which in Hong Kong’s case is characterized by some of the following elements:

  • significant resources

  • favorable economic system

  • strategic regional position

  • efficient infrastructure

  • high degree of connectivity

  • reliable legal framework

  • potential for partnership

  • a large collection of innovative analogues

  • long traditions of trade and commerce

  • a network of community builders

  • government support programs

  • private accelerators and incubators

  • asset investors

The strength of this ecosystem is how all these elements and actors conspire together to make Hong Kong a vibrant hotbed of creativity and entrepreneurship where great ideas can flourish. All these share a common commitment to leading with a vision and a desire to drive real transformational change.

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