Inside Startups - August

AUG

Inside Startups - HKSTP incubation programme aids new 3-D tech start-ups - Sharing economy and Uber - Event: Rise and OSC

www.educationpost.com.hk/is-aug15

(Advertisement)

CONTENTS Overview

4

HKSTP incubation programme aids new 3-D tech start-ups JOHN CREMER

Unusual Business

8

‘Who’d work with 15 dudes?’

ALICE WOODHOUSE

Trends

14

‘Sharing economy’ apps like Uber, carpooling services best suited to emerging economies, German start-ups find

Event

24

18

Uber’s rabble-rousing tactics mean its days in Hong Kong and mainland China are numbered ROBERT BOXWELL

Inside Startups is published by Education Post, South China Morning Post Publishers Ltd. All rights reserved.

ISBN:9﹣789628﹣148448

JOHN CREMER

Event

26

MBA Challenge – a battle of business skills STAFF REPORTER

Funding

28

WU NAN

Discussion

Start-up event Rise uses data science to make introductions

A good policy on crowdfunding will enhance Hong Kong’s role as global financial centre MING WONG

In the news

30

Hong Kong has world’s 5th-fastest-growing ecosystem of start-ups, study shows ZEN SOO

44

Overview

HKSTP incubation programme aids new 3-D tech start-ups Text: John Cremer

Some of Hong Kong’s most dynamic start-ups have the confidence and ambition to take on a dual challenge. They are aiming to get a new business off the ground with all the planning and effort that entails, but are also looking to base their enterprise on the very latest in 3-D and imaging technology.

That adds an extra level of complexity involving the design, development and testing of breakthrough products or services, while also creating the customer interest to generate sales and sustain future revenues.

“Starting a business is like building a city,” says Nick Lau, founder of PHO Imaging, which focuses on developing technology to produce high-definition, high-speed imaging equipment at a competitive price. “We want to make these amazing imaging tools available for people from all walks of life. By capturing things like the motion of a bee flapping its wings, or a coin flipping in the air, they can open up new ways of observing the world we live in and reveal details of what happens in much less than the blink of an eye.”

Photo: Shutterstock

Lau had long dreamt of starting his own business, and took the decisive step just before finishing his PhD in 2012. His answer to friends who questioned his lack of experience and the risks involved was that there is no “perfect” time to start a new venture, and the best way to learn is by doing.

“Getting everything up and running is tiring, but also very rewarding because you are learning something new every step of the way,” says Lau, who can count on support from the Hong Kong Science and Technology Parks (HKSTP) incubation programme. “We may still be at the stage of ‘struggling and surviving’, but the company I co-founded has been involved in the development of several types Inside Startups

6

Overview

of scientific and industrial imaging equipment, which have been sold to a number of research and educational institutes, [so we are clear about the way forward].”

In terms of practical applications, Lau sees future uses in automated manufacturing, where wide deployment of cost-effective, high-speed imaging equipment could facilitate faster, more accurate manufacturing processes and quality checks. This would help to minimise the effects of human error and to reduce labour costs.

In addition, economical high-definition imaging devices with a widened field of view can help with large-scale microscopic searches. This can be crucial when studying micro-organisms or in other cases where automatic biometric applications are needed.

“We are also planning to deploy our imaging equipment at the Science Park for real-time reporting through apps of things like queues at bus stops and the availability of seats in restaurants,” Lau says.

“In this way, people in the complex can plan where to eat or how to avoid the rush hour.”

He notes that, for any start-up, a lot of time and energy inevitably goes into planning, organisation and operations. However, the biggest challenge in building a business is to generate the revenue needed to pay rent, salaries and the seemingly endless accumulation of bills. Therefore, it is vital to focus on projects which will make money to ensure the company doesn’t sink while you are pursuing a “dream”.

In this respect, he adds, the Science Park community is great for keeping start-ups “laser-focused” and helping them network and find synergies.

“While working on hardware, you can easily keep in touch with others on the incubation scheme who are experts on cloud computing or developing apps,” Lau says. “That kind of environment helps collaboration and inspires new business ideas.”

For Jonathan Chiu, a computer engineer at 3DP Technology, which became an HKSTP tenant last year, the corporate goal is to produce high-quality 3-D printers at an affordable price, making full use of previous experience in developing inkjet printers.

Nick Lau Founder of PHO Imaging

Already, the company has secured more than 10 patents and has three different product lines: for educational purposes, for hobbyists and SMEs (small and medium-sized enterprises), and for industrial-scale printing.

Quite deliberately, the focus is on hardware. That is because the larger tech companies and universities have been doing software-related research for 20 years or more. But also, with Hong Kong so handily located right next to Shenzhen, a key source of hardware components, it makes sense to capitalise on that advantage.

THERE IS NO ‘PERFECT’ TIME TO START A NEW VENTURE, AND THE BEST WAY TO LEARN IS BY DOING Jonathan Chiu The company is particularly proud of its award-winning unique “smart dispenser cartridge”, which is a unique invention in that it can be used with most printers currently available in the market.

“Looking ahead, our plan is to develop cartridges for different materials,” Chiu says. “This will allow us to collaborate with both local and overseas companies in pioneering new uses for 3-D printing.”

Overall, he notes, with 3-D printers new to the market, the most difficult aspect over the past two years has been finding target customers and identifying the right channels to promote the products.

“However, the Science Park has provided opportunities to exhibit overseas and opened doors to help us explore different markets,” Chiu says. “This year, for example, we joined a delegation of local innovators to attend the international exhibition of inventions in Geneva.”

Inside Startups

8

Unusual Business

‘Who’d work with 15 dudes?’

Text: Alice Woodhouse

Michelle Sun

As the Hong Kong government moves more aggressively to promote technology start-ups in a bid to diversify the city’s finance and property-focused economy, experts warn that women are at risk of being left out.

Female students made up only a third of those studying technology-related subjects, and role models were severely lacking for those women that did try to buck the trend and join the male-dominated industry, Karen Farzam, co-founder of start-up showcase W Hub, said.

Young women needed to hear “that they can actually go into the tech industry”, she said. “The tech industry has so many opportunities that if [young women] feel they are attracted, they should definitely go for it.”

Farzam founded W Hub two years ago with Karena Belin to highlight Hong Kong start-ups and job opportunities in the technology industry in the hope of seeing a more diverse workforce in the future.

Photo: Shutterstock

Belin believes flexible hours make entrepreneurship a great choice for women who are one half of double-career couples that juggle child care with work. The structure of start-ups also suited women.

“A start-up typically is low hierarchy, big team players and that’s normally an environment where women feel more comfortable and thrive,” she said.

A barrier preventing Hong Kong women from taking up careers in technology may be the low representation of women in university science courses.

Inside Startups

10

Unusual Business

Last year, women made up 33 per cent of the local first-year undergraduate intake for science, technology and engineering and maths (STEM) degrees, down from 34 per cent in 2013, Education Bureau statistics show.

“We stress that the students’ choice of subjects should be on the merit of their aptitudes and aspirations, and gender is not a factor for consideration,” the bureau said of promoting science in secondary schools, adding that participation in science at secondary level showed no disparity between genders.

Farzam and Michelle Sun - the founder of children’s programming school First Code Academy - created Women Who Code 18 months ago to form a community for female coders, as the majority of web developers are male.

Women Who Code events now welcome a mix of about 20 women and men each month as Farzam hopes to encourage male startup founders to see there are women with relevant skills in Hong Kong.

“It’s better for the whole ecosystem to have diversity and we can learn a lot from it,” Farzam said.

Sun’s years of working in a bank with major technology clients piqued her curiosity about the sector. Initially, she felt intimidated by the high percentage of men in coding classes. But she overcame her hesitation to enter the male-dominated field by enrolling in a women-only bootcamp at the Hackbright Academy in San Francisco.

Karen Farzam

After working at two start-ups in the US, Sun returned to Hong Kong to launch First Code Academy in 2013. The school was designed as a coding academy for girls, but expanded to include boys at the request of parents.

First Code Academy now has 2,000 students aged six to 18 learning how to write their own Flappy Bird game clones or design and create apps tailored to their interests.

Sun said the male-female split in the academy’s classes was even until the early teen years when the number of girls began to dip.

“That’s why we feel so strongly about starting kids earlier,” Sun said, speaking from one of the academy’s bright Wan Chai classrooms.

“Primary school years are a great time to get a taste of something.

Not everyone will like it but at least they can make a more informed decision.”

The Women’s Foundation, which will later this year launch a study into why girls in Hong Kong are not choosing STEM subjects, shares Sun’s stance on instilling an interest in science and technology early on.

IT’S BETTER FOR THE WHOLE ECOSYSTEM TO HAVE DIVERSITY AND WE CAN LEARN A LOT FROM IT

“Encouragement and support to study STEM needs to begin early both in school and at home,” said Lisa Moore, research and advocacy manager for the foundation. “Girls who show an early interest in the field often lose interest because of pervasive but underrecognised biases in the learning environment.”

Inside Startups

12

Unusual Business

Photo: Thomas Yau Ron Tam Hoi-kit (second left).

The foundation runs a series of mentorship and workshop programmes to promote technology among girls, with volunteers from big corporations such as Goldman Sachs.

“It’s a good thing for more girls to get into the tech industry, because right now I would say it’s still very, very much male-dominated and we appreciate the variety of people joining. It’s a huge struggle,” said Victoria Li, 26, a recent graduate of educational start-up General Assembly’s 12-week web development course.

Li followed a similar path to Sun, moving from banking to coding.

She quit her London job with a plan to become her own boss and soon realised learning how to code would allow her to put her own ideas into practice.

Even with greater encouragement to pick STEM subjects, Noel Ho Ka-miu, external vice-chairwoman of the Computer Science Association Engineering Society at the University of Hong Kong, warned that the practical nature of the city’s youth and the low status of science careers in Hong Kong society would remain a large hurdle. “In general, in Hong Kong, our first choice is business, then to be a doctor or a lawyer and then the very last is studying science,” Ho said.

She said the majority of her female classmates were put off by the perceived loneliness of programming jobs and planned to go into

IN HONG KONG, IF A TEENAGER IS INTERESTED IN IT, THEY WILL BE MARKED AS A GEEK

the business side of technology firms in marketing or other more people-oriented areas.

Ho’s fellow chairman, Ron Tam Hoi-kit, agreed that societal pressure often deterred youngsters from science careers as job opportunities were limited.

Tam added the public perception of information technology-related careers put many young people, especially women, off computer science.

“In Hong Kong, if a teenager is interested in IT, they will be marked as a geek,” he said. “This won’t be solved by the government pushing a lot of funding to technology but by building a better image of technology and IT guys.”

Tam is far from a lone male voice wanting to see more female representation in technology and start-ups.

First Code’s Sun said many of her male colleagues were also eager to see more female faces in technology, explaining that one of her male tech start-up friends in New York was excited to finally welcome a woman to his medium-sized team.

As Sun put it: “Who wants to work with 15 dudes?”

Inside Startups

14

Trends

‘Sharing economy’ apps like Uber, carpooling services best suited to emerging economies, German startups find

As China wrestles with the finer points of the “sharing” or peerto-peer economy, exemplified by the bumpy regulatory ride now facing car-hailing apps like Uber, start-up founders and venture capitalists are busy exploring other markets with fewer hurdles.

Hamburg, a transport hub city in Germany, appears to be welcoming both, although not with completely open arms.

Like a number of Chinese cities, as well as Germany’s own Berlin and Frankfurt, it has imposed bans on Uber-like services but still allows such apps to continue operating amid something of a legal gray area.

The city is home to over 200 start-ups. Of these, carpooling service WunderCar, popular with commuters who want to share rides, has been downloaded 200,000 times since it was founded last year, the company said.

“After we tested our app in Hamburg for a few months, we decided to focus on emerging markets such as Turkey and Hungary,” said founder and CEO Gunnar Froh, adding that

Text: Wu Nan Photo: TNS

many of its 3,000 registered drivers are based in Turkey.

He said Hamburg served as perfect launch pad for the app but that it seems to work better in emerging economies where public transit is less convenient, rates of car ownership lower, and related legislation looser.

The app can operate in the German city because it offers rides for free at the moment, with passengers only contributing a “donation” if they deem it worthy. Of this, the company takes a 20 per cent commission.

After a court in Hamburg found car-hailing apps illegal last summer, further resistance from local taxi drivers has prompted local authorities to “urge” start-ups like Wunderkind not to charge customers for their services, according to the start-up.

Car-hailing apps are facing a stronger backlash in China.

Uber has had its offices in two major Chinese cities – Sichuan’s Chengdu and Guangzhou –raided in May and a handful of drivers

Inside Startups

16

Trends

were arrested in Hong Kong last week for lacking the correct permits as authorities move to resolve this regulatory grey area.

Chinese market leader Didi Kuadi, which claims to service over 200 million Chinese in 300 cities, is also now banned in a number of wealthy cities like Chengdu.

WunderCar said it may set a fixed price in the future, and that its goal is to offer commuters greater choice and convenience. This echoes similar sentiments expressed by Uber.

Also in Hamburg, entrepreneur Philipp Gloeckler founded Whyownit.com in 2012 to help people rent out small pieces of equipment – a microwave, bookshelf or surfboard, perhaps - to profit from the fledgling sharing economy.

After attracting some initial funding, his app was removed from Apple’s app store in March due to a paucity of users, he said.

“The ‘rental economy’ may work with business models such as Uber and Airbnb, but it may not work in other cases,” he said. He is now consulting on IT projects.

Sina Gritzuhn, the founder of networking platform Hamburg Startups, has attracted 350 members in two years.

Gritzuhn said interest in local start-ups is growing and more venture capital is coming to the city, but that it struggles due to its competition with Berlin, which has a bigger and more established start-up scene.

“Hamburg start-ups need to look for sustainable funding to feed their adventurous ideas,” she said.

THE ‘RENTAL ECONOMY’ MAY WORK WITH BUSINESS MODELS SUCH AS UBER AND AIRBNB, BUT IT MAY NOT WORK IN OTHER CASES

(Advertisement)

Come join us !

Be the next Innovation Hero!

hkstp.org

hong kong science park

#HKSTP

Inside Startups

18

Discussion

Uber’s rabble-rousing tactics mean its days in Hong Kong and mainland China are numbered

After seven Uber drivers were arrested and its Hong Kong office was raided, the company sent a link to a “petition” through its app to its Hong Kong customer base. Within days, democracy showed its power, with more than 50,000 people signing what essentially looks like an Uber Hong Kong group hug. The petition thanked Uber users for their “Uberlove”, but didn’t really demand anything.

I wrote last month that Uber will never make it in mainland China.

Organising their Hong Kong customers to sign a petition is one more nail in Uber’s China coffin. Uber is Twitter on wheels, and the petition seems more like Occupy Central than a smart business move.

Uber’s rabble-rousing in Hong Kong wasn’t a one-off. More than a million users signed Uber petitions last year. Last month, the anarchist coders in San Francisco forced the mayor of New York to

Text: Robert Boxwell

scrap a proposed cap on Uber cars there, in part by linking users to a New York Times op-ed item supporting “ride sharing”. Beijing must have loved that. It’s hard to see mainland authorities buying Uber China’s sweet talk while the company throws bombs at local laws it doesn’t like elsewhere. The Chinese know propaganda when they see it. Uber effectively traded China for Hong Kong with their petition. I’d trade China for Hong Kong in a minute for practically everything, but not if I were trying to build scale in a global taxi business.

It’s hard to see mainland authorities buying Uber China’s sweet talk while the company throws bombs at local laws it doesn’t like elsewhere Uber has been racing into cities worldwide, signing up uncertified drivers, who troll around with one eye on their iPhones, looking for customers. Clogged streets and increased air pollution from new gypsy cabs on the road are your problem, not theirs. Their problem is local laws. Uber’s drivers generally aren’t licensed and don’t go through the same rigorous background checks that regulated taxi drivers do. The district attorneys of San Francisco and Los Angeles sued Uber in December for deceiving the public by claiming its background checks were “industry-leading”. The suit, amended and expanded this week, notes examples of Uber drivers with convictions for murder, sexual assault, robbery, assault with a firearm, identity theft and driving under the influence. One had been convicted of “felony kidnapping for ransom with a firearm”. Nice. They all made it past Uber’s checks. They didn’t make it past California’s.

IT’S HARD TO SEE MAINLAND AUTHORITIES BUYING UBER CHINA’S SWEET TALK WHILE THE COMPANY THROWS BOMBS AT LOCAL LAWS IT DOESN’T LIKE ELSEWHERE

Photo: REUTERS

Inside Startups

20

Discussion

Public safety is the main reason taxis are regulated worldwide.

When your daughter is coming home late from work, you don’t want her getting in a car that hasn’t undergone a regular safety check with some guy who did time for sexual assault. The number of taxi licences issued is limited for the same reason governments give monopolies to electric utilities. They both provide a public service, and you have to protect those who make the investment.

Allowing competition in the taxi industry may be a good thing and is probably inevitable in the long run. But letting some Silicon Valley coders blow up billions of dollars of Hong Kong investment isn’t.

Uber can turn its customer and driver base into mobs. More than a million people signed Uber petitions last year, sent directly to them through the Uber app. Lord knows how many people call or text the mobile phones of local politicians when Uber publishes them. Uber CEO Travis Kalanick calls this “principled confrontation”. “We’re totally legal ... and the government is telling us to shut down,” he told Vanity Fair last year. Sure.

Here’s the reality. Kalanick once described the app to a crowd in San Francisco: “When you open up that app,” he crowed, one hand holding a microphone, the other thrusting like a rapper, “and you get that experience of, like, ‘I am living in the future, like, I pushed the friggin’ button, and a car showed up, and now, I’m a pimp’.”

Although smarter guys now write their smooth-talking Silicon Valley public relations nonsense, there’s nothing principled about the way they storm into cities. They just want to make a lot of money as fast as they can, and if it means thumbing their noses at governments, stomping on the necks of hard-working taxi drivers, and cutting corners on safety, well, that’s not their problem, either.

There are about 18,000 taxis in Hong Kong, carrying about one million fares per day. Last year, passengers filed slightly more than 10,000 complaints. Even if the number were 100 times those re-

THE TAXI SERVICE IN HONG KONG, WHICH PROBABLY ISN’T AS BAD AS IT’S MADE OUT TO BE, WILL IMPROVE. UBER JUST WON’T BE THE ONE DOING IT.

ported - a million - they’d still be small compared with the number of passenger rides each year - about 365 million. Yet practically everyone who takes enough taxi rides has had a bad taxi story. Human nature is to tell everyone about the bad ones and forget about the good ones. Uber won’t solve that. If you think Uber drivers are going to be different from taxi drivers in the long run, you’re nuts.

Photo: Dickson Lee

They talk about you, too. In fact, Uber drivers rate you after your ride. No tip? One star. Turn off their radio and roll up the window?

One star. And don’t ever keep them waiting. You get the picture.

They even know your name. You’ll never even know how many Uber drivers let you stand on the roadside, holding the illusion that Uber is your saviour in your hand, because other drivers gave you a thumbs down.

Uber’s Occupy Central-like petition probably helped seal their fate in Beijing and probably won’t help them in Hong Kong or any other Asian country where big-money interests control the taxi industry. You have to wonder what they’re thinking. Uber competitors who work with local taxi industries to bring a technology platform won’t make the same 20-30 per cent from every ride, as Uber wants, but they’ll be more welcome by existing players and governments. The taxi service in Hong Kong, which probably isn’t as bad as it’s made out to be, will improve. Uber just won’t be the one doing it.

Inside Startups

(Advertisement)

(Advertorial)

The first-of-its-kind StartmeupHK Festival will be held on 23-30 January 2016 to provide overseas and local participants a unique multi-day, multi-venue experience for delving into the future of entrepreneurship and disruptive innovation. The week will feature keynote talks, interactive how-to sessions, and powerful lessons from seasoned founders and investors.

investors, community partners, manufacturers, logistics providers, corporates, students and academics across sectors to share ideas and identify potential business partners.

The core events during the week will focus on the following industry verticals:

Phenomenal Growth

Fintech – the event will include world-class speakers, demo days, hackathons, networking sessions and a global competition for Fintech startups, where shortlisted winners will be invited to pitch to Fintech investors and identify potential partners/clients.

Consumer Internet of Things (IoT) – The two-day event will feature more than 25 speakers, plus workshops, exhibitors and a global competition for IoT startups, where winners of the competitions will be invited to pitch to key stakeholders, namely investors, partners and large companies interested in the IoT vertical.

HealthTech – The event will highlight the latest developments in health technologies, featuring thought leaders and some of the most innovative champions in Health Tech.

Data Analytics – KPMG will showcase its state-of-the-art data analytics lab and provide expert views, discussions on data privacy and case studies from around the world on data analytics.

The signature StartmeupHK Venture Forum will run on the afternoon of 29 January, followed by a number of networking receptions with entertainment, music and pubcrawls organised by various startup stakeholders in Lan Kwai Fong, Soho and at PMQ. In addition to these core events, the startup community will host a number of activities and events during the week, ensuring many networking opportunities for entrepreneurs,

InvestHK will organise a launch event on 1 September 2015 to announce the Festival. Stay tuned for more details: www. startmeup.hk.

Hong Kong has all the ingredients to foster the startup ecosystem, namely, a large pool of passionate champions and stakeholders with a “can do” attitude and spirit; high-networth individuals; investors and potential investors with plenty of capital; multilingual talent from all over the world; a world-class infrastructure; strong intellectual property protection and rule of law; ease of setup; low barrier to entry; a low and simple tax regime; access to Chinese, Asian and global markets; and production facilities next door in Shenzhen to help turn innovative ideas into new products and services for the local, Mainland and global markets.

Greg So, Secretary for Commerce and Economic Development, joined a VIP tour at the RISE conference on 31 July to meet with startup entrepreneurs from around the world.

RISE is the largest startup tech conference in Asia, providing a place for startups in Hong Kong and overseas to gather and show their strengths. The two-day event attracted more than 5,000 participants, more than half of them from overseas.

“We have experienced phenomenal growth in our startup ecosystem. In the last 36 months, co-work locations and incubation/accelerator programmes have increased from three to more than 40, and they are increasingly focused on specific sectors to differentiate their service offerings and uniqueness,” So said.

The Hong Kong booth at the RISE was jointly sponsored by InvestHK, the Hong Kong Science and Technology Parks Corporation and Cyberport. The booth showcased Hong Kong’s startup ecosystem and the latest developments in various technology clusters.

www.investhk.gov.hk www.startmeup.hk www.facebook.com/startmeuphk #startmeuphk

24 24

Event

Photo: AFP

Start-up event Rise uses data science to make introductions The stated objective of Rise, a two-day event for start-ups which opened in Hong Kong on 31 July, was to give new ventures a forum to present their plans or products and explore ways to take the next big step. With more than 500 exhibitors plus representatives of up to 300 potential backers in attendance, that goal was certainly accomplished.

“We were able to bring the right people together in the same place, so that entrepreneurs got to meet investors who can help to grow their business,” says Paddy Cosgrave, chief executive of organiser Web Summit. “The whole purpose of Rise is to support the start-up ecosystem. The feedback we received both during the event and afterwards has been extremely positive and we know that a lot of great connections were made over the course of the two days.”

No doubt, that was thanks in part to the use of data science to connect people through programs like Office Hours. Likened to a form of speed dating, this made it possible to schedule meetings between start-ups and investors quickly and efficiently. There was also a series of workshops and “mentor hours” where tech experts and senior executives, as well as journalists and financiers, were

Text: John Cremer

ready to offer realistic assessments and practical advice on what it takes to translate good ideas into a functioning business and then move up the growth curve.

“All start-ups face the same basic challenge, which is not just to grow their business in the first year or two, but to create a model and structure which will be sustainable in the long term,” Cosgrave says. “Funding is the key at every stage of development. Any startup with plans for expansion needs the right investors and backers, which is why we do as much as we can at Rise and all our events to facilitate interaction and create support networks.”

For many people, the pitch competition was a notable highlight.

It involved 33 start-ups from around the world, but all three finalists were from Hong Kong: Soundbrenner, Prenetics and Ambi Climate, which the judges chose as overall winner. The co-founders of the winning enterprise described themselves as “super excited” by their success and felt the wide range of countries represented made the competition – and the overall event – something special.

In their view, having three finalists from Hong Kong was “super awesome” and clear confirmation that locally based start-ups have what it takes to succeed in the international arena.

WE WERE ABLE TO BRING THE RIGHT PEOPLE TOGETHER IN THE SAME PLACE

For others, it was particularly encouraging to see the support given to new unfunded start-ups. A special BreakthroughHK stage gave 20 such ventures, which might not to able to afford their own booth, the chance to gain early exposure and, with luck, attract interest and funding. Initially, 60 local start-ups applied for this opportunity and, on the second day of the event, the best five had four minutes to pitch their wares followed by a three-minute Q&A session with the judges. The runner-up was Stay Angel, a service which helps to save money on hotel rates, and the winner was Goxip, which has developed an app to help find fashion using a smartphone camera.

“For me, though, I think the biggest highlight was the buzz from the people who attended and the support and energy that came from everyone in Hong Kong throughout the week,” Cosgrave says.

Early indications are that next year’s event will be even bigger.

“We are already planning for 2016 and have taken on board all the feedback about what people to see included,” Cosgrave says.

“In essence, we want to make Rise the most influential start-up and technology gathering in Asia.”

Inside Startups

26 26

Event

MBA Challenge – a battle of business skills Text: Staff reporter

Now in its third year, the MBA Challenge for Operation Santa Claus (OSC) invites MBA students and alumni to put their business and marketing skills to the test in a competition to raise money for one of Hong Kong’s most successful annual charity campaigns.

The challenge for participating teams is to use their business knowhow to generate as much revenue as possible from their proposals with the seed money provided. In doing so, they will also be expected to increase the general public’s awareness of OSC, its goals and successes and of the 22 charities chosen as beneficiaries of this year’s campaign. Each team will receive between HK$3,000 and HK$10,000 from the event sponsor Swire Properties.

Initailly, contestants must submit a business plan, including a short three-minute video to pitch their fundraising ideas, and a PowerPoint presentation of no more than six slides outlining their approach. The proposal judged the best will be awarded the most seed capital.

The period for fundraising activities will then run from 9 November to 31 December. There is no application fee but each team has to make a pledge to donate a minimum of HK$20,000 – with everything going directly to OSC beneficiaries.

Business school teams can include from three to six members, at least two of whom should be current MBA students or alumni. The deadline for initial registration is 21 September with business plans then to be submitted by 9 October.

The top fundraising team will win an exclusive, curated tour to Taikoo Hui, Guangzhou. Special prizes will also be awarded for the most creative business plan and the best final presentation.

Last year, Operation Santa Claus raised HK$20 million for 20 charities serving Hong Kong and mainland China. The hope, of course, is to surpass that total this time around by encouraging some of the city’s best young business brains to put their skills to work in the MBA Challenge.

Victor Ruiz, CEO of actiMirror and alumnius of blueprint’s accelerator programme – Swire Properties’ initiative to support entrepreneurship in Hong Kong – will speak to contestants at the campaign’s briefing session on 9 October. He will offer business advice and talk about successful pitching skills.

Inside Startups

28 28

Funding

A good policy on crowdfunding will enhance Hong Kong’s role as global financial centre

Photo: Shutterstock

Crowdfunding has become a global phenomenon, allowing crowds of people to support their favourite projects, charities or companies. Hong Kong Free Press, for example, recently raised more than US$75,000 in one month via a local platform. Start-up companies use crowdfunding to raise equity, though that is relatively new and falls in the grey area between the regulated public arena and private equity investing, which is unregulated.

Given Hong Kong’s role as a global financial centre and our government’s interest in promoting social innovation, it is imperative to understand the role equity crowdfunding can play in helping Hong Kong achieve its aspirations.

Many countries, including Italy, Britain and the United States, have recognised the link between job growth and the ease of raising capital. In 2013, the Italian Parliament issued a law, which also addressed equity crowdfunding, to allow “innovative start-ups” to raise risk capital through online portals. In Britain, the Financial Conduct Authority began regulating loan- and equity-based crowdfunding platforms last year.

Text: Ming Wong

It is disappointing that our Securities and Futures Commission has done little besides issue a notice on the regulations that might apply to equity crowdfunding and the risks involved A stunning development, however, occurred in the United States in March. The Securities and Exchange Commission released final Regulation A+ rules under Title IV of the JOBS Act that allow growth companies to raise up to US$50 million from unaccredited investors in a mini-IPO-style offering, serving as a potential alternative to venture or other institutional capital.

These new rules mean that companies aspiring to be the next Uber or Airbnb would be allowed to offer their stock directly to their drivers, riders, renters and tenants as well as the general public.

To protect unaccredited investors (deemed less sophisticated), the rules restrict them to investing no more than 10 per cent of their net worth or net income each year, whichever is greater.

Closer to home, Japan, Taiwan and Malaysia have also introduced similar legislation that legalises equity crowdfunding. So it is disappointing that our Securities and Futures Commission has done little besides issue a notice on the regulations that might apply to equity crowdfunding and the risks involved.

IT IS DISAPPOINTING THAT OUR SECURITIES AND FUTURES COMMISSION HAS DONE LITTLE BESIDES ISSUE A NOTICE ON THE REGULATIONS THAT MIGHT APPLY TO EQUITY CROWDFUNDING AND THE RISKS INVOLVED

Equity crowdfunding is here to stay and constitutes an important part of Hong Kong’s role as a global financial centre. For our policymakers, legislators and regulators to do nothing would be a major mistake. Instead, we need to learn from global best practices to design an appropriate equity crowdfunding model for Hong Kong, one that provides adequate protection to the investing public while allowing start-up companies to access the capital they need to create jobs, grow their businesses and contribute to the economy.

Inside Startups

30 30

In the news

Hong Kong has world’s 5th-fastestgrowing ecosystem of start-ups, study shows Hong Kong has the fifth-fastest-growing ecosystem of startups in the world, according to a recent study that measured such indicators as the availability of venture capital and the acquisition value of start-ups over two years.

But the city’s start-up industry lags far behind that of long-term rival Singapore, another economic powerhouse in the region, the survey showed.

Due to financial and time restraints, China, Japan and South Korea were excluded from the study: a list of 40 ecosystems compiled and ranked by San Francisco-based cloud analytics firm Compass.

It also ranked the overall state of various cities’ start-up ecosystems by taking into account their performance, funding, talent, market reach and experience.

In terms of growth, Hong Kong ranked joint fifth with Amsterdam.

Berlin was first, followed by India’s Bangalore, Sao Paulo in Brazil and London.

Globally, Hong Kong placed 23rd. Singapore was 10th and Bangalore 15th.

Silicon Valley, New York City and Los Angeles occupied the top three slots, respectively.

Hong Kong’s rapid growth was attributed to a resurgent entrepreneurial spirit, its proximity to the Chinese mainland, and convenient access to other Asian markets.

Photo: Nora Tam

Text: Zen Soo

But the study noted that Hong Kong had “significantly lower” access to venture capital than cities like Singapore.

It attributed this to local investors’ lack of experience in dealing with the tech industry and a preference toward “traditional” investment areas like manufacturing and trading.

“To realise its full potential as a start-up hub, Hong Kong should further develop its position as an integrator of ideas, talents and capital from around the world,” said Rachel Chan, founder of Innofoco.

Innofoco is a Hong Kong-based consultancy that will work with Compass to publish a more detailed report on the city’s start-up scene in October.

Richard Ji

Start-ups in the risk-averse city face a number of challenges. Many struggle to attract high-calibre technical staff, despite Hong Kong boasting several world-class universities, due to the competition from big companies, the study said.

Yet it identified a number of important drivers, such as the incubation programmes implemented by the Hong Kong Science and Technological Parks Corporation, and a move to market the city as a start-up hub by government bodies like InvestHK. Hong Kong science park said last month it would invest HK$50 million to support technology start-ups in the city.

In April, the city government launched its Enterprise Support Scheme that provides up to HK$10 million (US$1.29 million) in funding to companies for research and development.

Since 2012, the government has been mulling the creation of an innovation and technology bureau.

TO REALISE ITS FULL POTENTIAL AS A START-UP HUB, HONG KONG SHOULD FURTHER DEVELOP ITS POSITION AS AN INTEGRATOR OF IDEAS, TALENTS AND CAPITAL

Timothy Tong, the president of Hong Kong’s Polytechnic University, has fully endorsed this project to help grow start-ups in the technology sector.

Moves to have such a bureau approved have been delayed several times in recent months and are not expected to get back on track until October at the earliest.

Inside Startups