The View | To be the next Silicon Valley, Hong Kong must focus on people, not real estate

Hong Kong needs to attract both experienced start-up investors and geeks passionate about technology

From tax incentives to a public relations push, the city must do more to make its start-up landscape attractive to seasoned investors, while nurturing an ecosystem that would attract tech enthusiasts

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A woman looks out from the Star Ferry with the skyline of Hong Kong’s business district in the background, in June 2018. Photo: AFP

Published: 6:30am, 9 Mar 2023

Paul Graham, founder of technology start-up accelerator Y-Combinator, once said that what it would take to build another Silicon Valley is “the right people”. I truly believe Hong Kong can be the next Silicon Valley – if, and only if, we get the right type of people on board. Essentially, there are only two types: the start-up investor and the geek.

Hong Kong has plenty of rich people and “wantrepreneur” investors, but most made their fortune in real estate, finance or manufacturing. They have great intentions, but lack experience investing in technology.

Some take too much equity ownership. Others have conflicts of interest, and in pursuing their own agendas, push start-up founders to work on certain products or customers. Yet others are so risk averse that they structure their investment as if it were a personal loan. When Hong Kong start-up founders take money from these investors, it almost always ends in disaster.

Without experienced start-up investors, Hong Kong will continue to be stuck in a vortex of the wrong investors investing in the wrong companies. We need investors who truly understand start-up founders’ “blood, sweat and tears” approach, who know how to be a guide and coach, providing advice, connections and funding only when the founder really needs it.

Hong Kong should invite investors from Silicon Valley and mainland China to teach local investors the best practices in venture investing so they can make investment decisions that maximise founders’ – and therefore their own chances of – success.

According to this year’s Hong Kong Internet Report, most local investors don’t really invest in Hong Kong start-ups. Given this, Hong Kong could consider giving successful local start-up founders tax incentives to invest in other start-ups in the city.