Hong Kong is a less attractive fundraising market for fintech startups in Asia than its rivals China or Singapore. Why is this?
According to Gordon Yen, Managing Director of Hong Kong-based Radiant Venture Capital, the trillions of dollars under management in the city are generally not considering venture capital-style investments.
Speaking at the Nexchange Fintech O-2-O Venture Capital Meetup at Cyberport, Yen said, «There is a perception that there is so much money in Hong Kong, if you come here as an entrepreneur you’re bound to get funded, but it’s much harder than people think.»
Several Hindrances
A number of factors contribute to the dearth of VC funding in Hong Kong, including the prevailing regulatory approach, conventional investor attitudes, and the low-level of technology adoption at Hong Kong financial institutions.
«Currently we aren’t seeing too many fintech startups in Hong Kong trying to tackle the Chinese market. Perhaps this is due to differences in culture and regulation, but I think the business approach is also very different. In China, startups are typically much better funded, and they take the attitude of ‘spend first’ to gain customers and market share, all the while continuing to gain value,» said Yen.
Hong Kong Government
Yen however commended the Hong Kong government for supporting the development of the start-up ecosystem «in spirit» while recommending further initiatives to support entrepreneurs and VC investors.
Yen also commented that here are many things the Hong Kong government can do to further support start-ups, such as developing a comprehensive register of VC investment and funding.
In his opinion the regulatory approach is currently too basic he feels they focus on regulating the public equity markets but there is insufficient consideration for venture capital. There needs to be a more distinct set of regulations here.”
