Financial Secretary Paul Chan Mo-po announced that Hong Kong was set to launch a fund worth HK$5 billion (USD637 million) to support local tech companies and attract foreign start-ups in August. Hong Kong is a base for almost 600 FinTech companies, with 7% of them in the blockchain sector.
Chan first announced the Strategic Tech Fund In his budget speech in February, when he said he would invite the Hong Kong Science & Technology Parks Corporation along with Cyberport to identify tech enterprises “of strategic value to Hong Kong, and investment opportunities conducive to enriching the technology ecosystem”.
He told the South China Morning Post that the government hoped the Strategic Tech Fund would fill the gap in series A and series B financing for start-ups and help convince investors to back projects by Hong Kong tech entrepreneurs. Series A refers to a start-up’s first major venture capital financing, while Series B refers to further and larger investments from corporations or institutional investors.
Noting that the two parks already had seed funding for start-ups, Chan said they would work with venture capital funds to co-invest when companies grew to a certain size. The government had put measures in place to attract private equity funds to set up in Hong Kong to support these companies.
“In terms of IPO for biotech, I think we are the world’s number two, just after the US, but there is a gap in Series B, Series A,” he said. “When these start-ups grow to a certain size, they want to further grow, they need bigger capital. If the government is able to make an investment, that will help them. [It’s] not just money, but also the confidence … [and] enable them to raise funds with the other investors.”
Countries such as China, the US and Singapore have been rolling out measures to attract talent and money to their tech sectors. Singapore’s Temasek investment company injected an estimated USD500 million into the city state’s sector in the first half of last year.
In 2020, Chan announced the establishment of the Hong Kong Growth Portfolio and appointed fund managers as general partners to make strategic investments. But the new fund would operate differently, he stressed. Rather than giving a mandate to general partners, an investment committee would be set up to identify new projects and Hong Kong’s future unicorns.
“So it is Hong Kong unicorns hopefully, Hong Kong future unicorns, and also we will use this money to try to attract some of the foreign tech companies … to come to Hong Kong,” he said.