Hong Kong is one of the world’s premier financial hubs, but can it be a destination for tech startups? That was the question put to a panel of experts at the TechCrunch China event in Shenzhen today. The answer, largely, was yes but it may need a little time.
“Hong Kong is becoming a global innovation center, but it needs companies to look up to,” Blake Larson, head of international at logistics on-demand startup Lalamove, told an audience at the event.
Larson, whose company has raised more than $60 million from investors, argued that all signs point to a change in the mindset and ambition within the country, but it will take time for perceived ‘riskier’ career options to gain mainstream attention. Traditionally, banking and real-estate has been the primary choice of career for fresh graduates, who have pressure on landing a rewarding and established career to satisfy family and society. Added to that, here is no example of a tech company rising up to set an example for others to follow. Yet.
“Hong Kong still lacking a little bit, finance and real estate [have] dominant marketshare in the economy and the younger generation still have that mindset,” Eric Gnock Fah, co-founder of travel tech company Klook, which recently secured a $30 million financing round led by top-tier investor Sequoia
“But we also see increasing interest,” he added. “This summer we had 10 interns keen to learn more about the startup experience.”
A bump in internships is something Larson has noticed at Lalamove, while Phil Yuen, CTO of Tink Labs, agreed that student interest in startups has never been higher.
“It’s a very good gauge. In the beginning [when Tink Labs started five years ago] there was barely an interest, but this year it has been significant. That’s a good sign of folks getting interested in startups,” Yuen said.
Yet, despite a surge in interesting, Hong Kong doesn’t have the size or scale of other countries, particularly China. With a population of just over seven million people, the panelists were united in agreement that bordering Shenzhen — the so-called hardware capital of the world — is a critical component for showcasing innovation, and helping find the talent need to staff tech startups. As a hub that counts the likes of Tencent, Alibaba and Baidu among its residents, Shenzhen is really a beacon of innovation that can have an important impact on Hong Kong’s tech space.
Right now, though, talent acquisition is an issue for all three panelists and their respective startups. That’s not uncommon for any startup anywhere in the world, but the small population makes it a critical component for Hong Kong to advance as a location for startups, the panelists said.
“I’m sure the government is aware of it, [but it is] not a problem that can be solved in the next few years,” Klook’s Fah said. “The opportunity is being next to Shenzhen.”
“The issue of tech talent is because there’s not much of a market,” Larson added.
“The biggest opportunity we found is the if you can survive in Hong Kong with all these head winds, the opportunity, if you can get though that, the sky is limit because you built up a tolerance to all these challenges in front of you. Nothing else is really going to intimidate you,” he explained.
Hong Kong isn’t just about the survival of the fittest though. As a cosmopolitan city with links to China, a high level of English and more, the city can act as an ideal incubator to develop ideas and test theories more rapidly than would otherwise be the case.
That’s according to Yuen, who explained that Tink Labs — which puts concierge-style smartphones in hotel rooms — has developed its focus on different sectors of the hospitality industry thanks to Hong Kong’s diversity.
“It’s about finding the right thing Hong Kong can serve you for,” he said. “What is Hong Kong good for and then use that as a stepping stone to a much larger opportunity.”
“For us, there is a very wide variety of different kinds of hotel, different visitors, and that allowed us to improve the product very quickly,” Yuen explained.
While the investor scene has heated up with new VCs arriving, and existing investors in China and beyond finding reasons to keep tabs on promising startups in Hong Kong, there’s no obvious mentor for the next generation of startups and founders.
But they might not need to wait for too long.
Tink Labs is reportedly in talks to raise new funding at a valuation of more than one billion U.S. dollars — potentially making it Hong Kong’s first tech unicorn — although Yuen declined to comment on the speculation. That would make an important milestone for the country, but already the startup is helping broaden the appeal of tech to new audiences. That’s because its CEO, Terence Kwok, is aged just 26.
Unicorn status is one thing, but a tangible exit for a company is something else altogether and that’s where Lalamove could come into the picture.
Larson previously told TechCrunch that his company could go public in the coming years and, while he said IPO plans take up just “0.1 percent of our time,” he conceded that it would be another important step for the development of Hong Kong’s startup scene.
“It would be a great opportunity to be one of the first, if not the first… and be a symbol for the community to show it is possible to build a global technology company from Hong Kong,” he said.
Hong Kong would almost certainly be where the IPO would happen, Larson said, adding that the firm might consider a dual-listing on the Nasdaq if it “deserved it.”