The StartmeupHK came and went. Now it’s back to the grind for most start-ups trying to get funding, make connections, and develop products and ideas that would resonate with investors and target customers.
According to InvestHK, the startup scene in Hong Kong grew 18% year-on-year to 2,625 startups in 2018 with 9,548 jobs, up 51%, following from the growth. Hong Kong continues to attract foreign entrepreneurs to set up shop in the city, with 35% of startups originating from elsewhere, including 17% from the UK, 16% from the US, mainland China (12%) and Australia (9%).
Hong Kong is now home to more than 550 Fintech startups who see the city’s simple tax system (67%), free flow of information (62%), geographical location (59%) are points that make it an attractive place to start a new venture.
But Hong Kong still has much to improve upon to continue to attract and grow the startup community. A KPMG 2018 study revealed four key hurdles that the city must overcome:
- Funding: There is a relative lack of institutional funding for start-ups, with personal savings (82%) and family savings (54%) still the top two sources of capital.
- Resource support: While Hong Kong has world-class research institutes and an increasing number of co-working space and start-up programs, only 15% of entrepreneur respondents make use of official R&D support, and 10% use mentoring.
- Risk-averse social environment: Even though there is a desire from entrepreneurs and students to drive change and make a difference, societal expectations are preventing them from making bolder decisions such as starting their own business. Support from family and friends to pursue an entrepreneurial career is low.
- Capturing mainland China/Greater Bay Area opportunities: Hong Kong is not fully capitalizing on its role as the gateway into mainland China. While the Greater Bay Area is considered the best place to start a business, only 31% of entrepreneur respondents believe Hong Kong startups are well-connected with other businesses in the region.
Fintech Innovation spoke to one InsurTech startup that calls Hong Kong home. Galileo Platforms co-founder Mark Wales shared his experience as a startup in Hong Kong.
Galileo Platforms 2 years ago: Disrupting insurance with blockchain
When asked about the value of Fintech conferences and events, he says they are a necessary part of the branding and business development process.
“We’re a B2B company and so we go out and get in front of insurers and distributors and other people who are out looking and interested in using InsurTech solutions. So one of the key areas for marketing for us is the Fintech conferences,” he explained.
These events helped Galileo Platforms connect with investors interested in their technology and vision, as well as insurers who are looking for InsurTech startups that can help them solve business problems they are facing.
He cited the Fintech Week in Hong Kong and the Fintech Festival in Singapore as good platforms for business development for Galileo.
When prodded for lessons on being a startup, he quipped that everything takes long than what you thought it would be. “We knew that what we were doing was going big and complex. What we didn’t think was that it would take us three years before the [Galileo] platform would go live. Make sure that you are in there for the long run because it could take a lot longer than what you thought,” he advised.
Funding strategy is another issue that most startups don’t put enough effort into. “People talk very readily about the amount of money that's available in the VC space. But in reality, VCs are still very selective. They do a lot of due diligence and it is a long process that you need to go through. So don't overlook that.
“Finally, from a business perspective, it is about getting traction with clients and securing that first customer. Because once you have that first client you know it's easier for others to follow. But finding their first client can often take far longer than what you expected.
Watch the full video, and listen to Wales share his insights and recommendations culled from real experience launching a successful InsurTech business. Topics covered by Wales include:
- Value of events for start-ups: 0:06-1:42
- Key learnings in the 3 years since Galileo Platforms was founded: 1:42-3:21
- What was your biggest challenge since co-founding Galileo Platforms? 3:21-4:54
First published on Fintech Innovation