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Hong Kong’s Startup Funding Landscape in 2024

Hong Kong has always been a place of interest for entrepreneurs and investors. It has always been an important location for business and trade. In continuation to this, the past few years have been highly positive for the startup ecosystem in Hong Kong. The startup landscape has experienced a rapid surge in these years and has grown at an incredibly high pace.

Hong Kong’s startup ecosystem has proved to be beneficial for businesses and entrepreneurs. There are several reasons for the growth of startups in Hong Kong which include its strategic location, support from the government, dynamic market, developed infrastructure, world-class connectivity, robust legal system and simple tax system. 

However, one of the most important reasons for the growth of businesses in Hong Kong is funding. Entrepreneurs need funds to set up and run their businesses in Hong Kong. Funding is of great importance for startups in Hong Kong as funds are needed to buy equipment, pay bills, pay the employees, and carry out other tasks. To get funding in Hong Kong, startups have various options, such as venture capitalists, angel investors, accelerators and incubators, government grants and policies, and many other sources. 

If you are aiming to start a business in Hong Kong or want to get funding for your Hong Kong startup then this article is definitely for you. In this article, we will be discussing the trends in the Hong Kong market, funding sources in Hong Kong, attractive sectors for investment and challenges and opportunities for startups in Hong Kong. 

Hong Kong's Startup Funding Landscape in 2024

Overall Growth and Trends

Significant growth has been experienced in the business landscape and the number of startups in Hong Kong. There has been a constant growth in the number of startups getting established in Hong Kong. According to Statista, as of 2023, around 4,250 startups are residing in coworking spaces and accelerators in Hong Kong. Compared to 2019, an increase of 34% has been experienced till the year 2023 in the number of startups in Hong Kong. Each year is setting new records for the number of startups in Hong Kong and is expected to reach new heights in the coming years. 

The Hong Kong government has also understood the importance of startups in Hong Kong and how they can contribute to the rising economy of Hong Kong. Therefore, the Hong Kong government has shown complete interest in supporting the startups. Understanding the significance of startups for the growth of Hong Kong, the Hong Kong government has allocated a budget for startups in the 2024-25 budget of Hong Kong

Some schemes included in this budget allocation are the New Industrialisation Acceleration Scheme (NIAS), Boost for Life & Health Tech Startups and HKSTPC’s Corporate Venture Fund. NIAS is a $10 billion initiative focused on startups operating in the I&T sector, such as artificial intelligence, data science, and energy tech. An InnoLife Healthtech Hub is also under planning in the Hong Kong-Shenzhen Innovation and Technology Park, intending to attract talented and innovative researchers. They have also introduced several other government grants and initiatives for startups, which will be discussed further in this article. 

Funding Sources for Startups in Hong Kong 

Hong Kong startup funding plays a vital role in the success of a startup. As mentioned above, how funds fulfil the various needs of the startups and how they help attract more investment, we are going to conduct a deep analysis of the funding sources in Hong Kong. Not only government schemes but also various private funding schemes can help startups in getting investments in Hong Kong. The Hong Kong government has recognized these needs and therefore has launched a multitude of initiatives that can help startups get funding in Hong Kong.

These initiatives focus on simplifying the procedure of getting funds in a business and how every startup can achieve its goal. The initiatives launched by the government include the Innovation and Technology Fund (ITF), Funding Scheme for Youth Entrepreneurship in the Guangdong-Hong-Macao Greater Bay Area, Cyberport, Hong Kong Science and Technology Parks Corporation (HKSTPC), Science And Technology Entrepreneur Programme (STEP), SME Loan Guarantee Scheme and many other schemes. 

Other than the government funding schemes, the private funding landscape of Hong Kong is also very strong. Startups can get funding from numerous sources in Hong Kong. Entrepreneurs have multiple options to choose from when arranging funds for the startup such as venture capitalists, angel investors, bootstrapping, accelerators and incubators, crowdfunding and others.

Venture capitalists can be termed as investors who invest huge sums of money in a startup that has moved ahead from its initial stage and has a reasonable stand in the market. On the other hand, angel investors are the investors who are constantly looking for startups with ideas that have the potential to be successful in Hong Kong. They provide seed investment to the startups so that the startups can establish themselves in Hong Kong and start running their business smoothly. If a startup understands its needs and can explain them to investors, it can easily get investments into the startup. It is important to have a goal in mind when pitching for investment so that the investors can also understand your needs and the project they are going to invest in. 

Key Sectors Attracting Investment

Hong Kong has made fast-paced advancements in some key sectors such as fintech, e-commerce, logistics, health tech, Big Data, artificial intelligence, retail tech, media and entertainment, blockchain, cyber security, fashion, and many other industries. These sectors have been the most flourishing sectors in the last few years and have shown significant growth in Hong Kong. These sectors have attracted a leading chunk of the investments made in the Hong Kong market.  Several factors have contributed to the thriving of these sectors in Hong Kong and have helped them to attract investments. 

If we look into the details of the factors that have led these sectors to attract more and more investments then we can say that four major factors have helped startups attract investments in Hong Kong. The increased use of the internet, technological advancements, connectivity development, and digitalization are the four major factors that have resulted in the increased attraction of investments by these sectors. 

Some government initiatives supporting specific sectors are the Innovation and Technology Commission (ITC), which supports fintech and healthtech startups and provides them with funds to excel in the fintech industry. The Design Industry Funding Scheme (DIFS) is for startups that are involved in the design business. It offers them resources and assists them in moving towards design excellence in Hong Kong. 

The Development Fund for the Travel Industry (DFTI) focuses on tourism startups. It provides funds to startups in the tourism industry so that there is competitiveness in the industry and the industry thrives. Cyberport is a project that supports startups related to digital entertainment and green tech. It is a program that nurtures animation, gaming and virtual reality startups. Hong Kong Science and Technology Parks Corporation (HKSTPC) has been set up to increase the interest in biotechnology and material science. In this way, Hong Kong can make several innovations in the biotech industry. 

Looking Ahead: Challenges and Opportunities

Although Hong Kong is one of the best places to establish a startup, there are still a few challenges for startups operating here. However, these challenges can be easily countered by planning and smart execution. Some of the ongoing hurdles for startups in Hong Kong are talent acquisition and retention, market saturation, high operational costs, increased competition and regulatory compliance. 

Hong Kong is home to some of the most talented individuals in the world but to hire them and retain them in the startup can be quite challenging. It is important to understand the requirements of the employees and offer them the best deals because if they find a better deal or a better business environment in some other startup, they might leave you. So, you must keep track of the needs of your employees and try to comfort them in every possible way to retain them for a long period. Hong Kong is counted among the places which have the highest operational costs. Running a business in Hong Kong is quite costly and requires you to invest a huge amount of money in the startup. 

Numerous opportunities are emerging in the funding landscape of Hong Kong that can help startups in many ways. Startups can use these opportunities to counter these challenges and the startup from failing due to financial problems. Several initiatives have been launched to meet the startups’ funding needs, including the Innovation and Technology Commission (ITC), Co-investment Scheme, University Partnership Programmes, and Technology Voucher Programme (TVP). These initiatives can help startups get funds, develop infrastructure, and get collaborations and international cooperation.

Need Expert Assistance in Managing Your Hong Kong Startup? 

Starting a business in Hong Kong is one of the best choices a person can make. Hong Kong offers a wide range of opportunities to entrepreneurs who have a viable business idea. Such entrepreneurs can grab the attention of investors and also enjoy the benefits of the government schemes focused on startups. The above article has explained in detail the initiatives and schemes launched by the Hong Kong government to support emerging startups in Hong Kong. 

If you also have the will to start a successful startup in Hong Kong, then having a faithful companion by your side can be highly beneficial for you. If you need expert assistance in managing your Hong Kong startup, then Startupr is the right partner that can help you register and operate a successful startup in Hong Kong. It provides its customers with several services that can help them run their business smoothly in Hong Kong. The services offered by Startupr are company formation and registration, registered office address, bookkeeping and accounting, and many more.