Silicon Valley lends a hand
Updated: 2016-01-27 08:31
By Frannie Guan(HK Edition)
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IT entrepreneurs are having a tough time convincing local investors and consumers that the city has a wealth of IT talents. A group of Silicon Valley veterans have come to help bring the message home. Frannie Guan reports.
group of Hong Kong IT professionals have come home from Silicon Valley, the mecca for those in their field, with hopes to bring new life to the arid wasteland confronting IT startups starving for investment in the city.
Henry Wong, founder and chairman of Diamond TechVentures - a Silicon Valley-based venture capital firm, wants to "give back" something to the city where he grew up and received most of his education.
"Hong Kong is my home. If I don't help my fellows, who I am going to help?" said Wong, who is also a mentor to students attending the MBA Program at the Stanford Graduate School of Business. Diamond TechVentures has made several successful investment exits, including initial public offering (IPO) of New Oriental Education and Technology Group Inc, a provider of private educational services on the mainland.
Hong Kong's home-grown technology companies have been starved for investor backing, with the result that many promising young professionals have packed up and left town. According to analysis from Asian Venture Capital Journal, a monthly magazine, venture funding for the Hong Kong technology sector broke through the $100 million barrier in 2015 for the first time. The city's rival, Singapore, raised $676 million and Singapore boasted four to five times more investment deals than Hong Kong was able to muster.
"Money is always a big problem. There are not many venture capital companies in Hong Kong supporting home-grown startups," said Wong. He explained that while Singapore and South Korea venture capitalists tend to invest in their own home-grown technology companies, Hong Kong investors have shown a preference to put their money in overseas startups.
Scarcity of support
The venture capital fund of Hong Kong tycoon Li Ka-shing has made heavy investments in Silicon Valley and Israel since the fund was established in 2006. It has backed 25 technology startups in the US and 23 in Israel. Not one of the 69 companies it has supported has been a Hong Kong startup.
The Hong Kong startup ecosystem, still in its early stages, has proven anemic, caused in part by the fact that local investors appear to shy away from information technology startups, said Leslie Yuen, founder of Globalization Training Office, a Silicon Valley-based consulting organization to support technology entrepreneurs. "In Silicon Valley, when companies are successful they love to establish venture funds to invest in startups. They have made money at what they're doing, and love to encourage others and give it back," said Yuen.
Yuen and Wong, together with eight more Hong Kong-born game changers who have worked in the Bay Area were invited in December by Invotech, a local non-profit organization aiming to promote Hong Kong's innovation and technology development, and give back something of what they have learned and gained in the world's leading innovation hub. Wong said his company would focus on financial technology based on big data here in Hong Kong.
Yuen said he had no reservations about coming back to Hong Kong, where he sees a city whose youth is becoming lost, with scant hope for upward mobility. He noted that the city, with its grand aim to become the "innovation and technology hub" of Asia, actually is falling on some global innovation indexes.
The latest Global World Competitiveness Index, released by the World Economic Forum in September, listed Hong Kong in seventh among 140 economies. The city's innovation ranking however was in 27th place, which played a part in lowering Hong Kong's competitiveness index.
Go global and bold
Bess Ho is an angel investor with more than 10 years' experience in entrepreneurship and investing in technology startups in the Bay Area. She explained that the mission of "giving back" to Hong Kong isn't limited to funding, but also to offering expertise and guidance. She said many in Silicon Valley such as Facebook founder Mark Zuckerberg are mentoring startups.
The Invotech meeting was the first time for Ho to listen to idea pitches from young entrepreneurs in her homeland. She said as venture capitalists are more likely to make investments on products addressing the big market, it is imperative that Hong Kong's young entrepreneurs think big and go global beginning on day one. Many, she observed, overestimate the difficulties in going global.
"What I see in my students here in Hong Kong is that they always want to show me what they can do, how smart they are and how much they have already learnt from school," said Wu Po-chi, adjunct professor at the school of engineering at the Hong Kong University of Science and Technology (HKUST). "What they need is to define a specific problem and find the solution, and more importantly, be willing to take risks," Wu said.
"Our culture sometimes becomes our burden," said Yuen. He elaborated, noting that in Chinese culture, failure means losing face, so people are always afraid of it. But in Silicon Valley, he added, nine out of 10 startup companies fail, and some venture capitalists will not even invest in those who have never failed before. Thus it is a necessity that they should learn from failures and take it as an opportunity, instead of being fearful, said Yuen.
Ho said she had been in touch with some of the young entrepreneurs she met on the pitch day of Invotech meeting for fledgling companies seeking investment. She hopes that when she returns to Silicon Valley, she will be able to shed new light on Hong Kong startups and bring more investors here.
Contact the writer at frannie@chinadailyhk.com
(HK Edition 01/27/2016 page10)