Feeling Stuck? Learn More Alternative Ways to Fund Your Hong Kong Business
8 minute read
Entrepreneurs sometimes struggle when it comes to finding a firm or a scheme that can help them acquire the necessary funds to aid business growth.
They usually seek bank loans, but these loans are not handed out so quickly. Many banks are reluctant to approve a loan, which is a complicated reality for a number of business owners.
Frequently banks do not understand that a company has value even when there is growing revenue and a solid, happy customer base. Bankers, indeed, are ‘numbers’ people.
But fortunately, Hong Kong offers other funding opportunities for potentially successful companies. It does not matter if you happen to be a local business owner or a foreigner. If you have a great business idea, various Hong Kong funds are there to help.
As you are probably aware, the government and the entire Hong Kong environment is committed to strengthening and growing the startup and the business ecosystem in general.
The authorities have numerous resources available for entrepreneurs that were designed to support new small businesses. This support often comes in the form of funding.
However, a business owner can also look for mentorship opportunities, consulting services, and even business networks.
More notable government funds designed to help business include:
- Branding, upgrading, and domestic sales fund. The fund is designed to help Hong Kong businesses in undertaking projects to develop brands, upgrade, restructure their business operations, and promote sales in the ASEAN market and Mainland China market.
- SME Export Marketing Fund. The fund provides financial help to individual small businesses for business expansion.
- SME Financing Guarantee Scheme. The fund aims at helping small businesses and non-listed enterprises obtain loans from participating lenders such as banks with the goal of meeting the business needs to enhance productivity and competitiveness.
- Retail Technology Adoption Assistance Scheme for Manpower Demand Management (ReTAAS). This scheme is designed to provide funding support for eligible retail enterprises to adopt technologies with the aim to enhance productivity.
- CreateSmart Initiative (CSI). This initiative provides financial help to organizations conducive to the development and promotion of the creative industries.
Additionally, if you still cannot find the right fit for your business, you should definitely check out the StartmeupHK website. StartmeupHK is an organization developed by InvestHK that aims at helping founders of innovative and scalable businesses from overseas set up or expand in Hong Kong.
This initiative offers information about the ecosystems in the region, they also connect entrepreneurs to the business communities and even host valuable business events that are great for networking.
Finally, it is always wise to visit the official government website if you want the most accurate and reliable details regarding different funding schemes available for small business and medium-sized enterprises.
Crowdfunding is one of the great ways to raise money to support your business. It is a method where startups raise capital through contributions.
Crowdfunding initiatives that are promising usually gather a lot of people. There are specialized crowdfunding platforms that connect the right people with the right companies so that both sides can profit from this relationship.
As a business owner, this kind of fundraising concept can help you acquire the necessary funds from a larger pool and tap into your network of friends and family, investors, and other interested parties. One great benefit of crowdfunding is that it’s a great chance to test and validate your business idea. It is possible to get feedback from potential customers and further define your business product.
The main types of crowdfunding include:
- Peer-to-peer lending. The crowd lends money to a company with the understanding that the money shall be repaid with interest.
- Donation crowdfunding. The crowd donates small amounts to meet the larger funding aim of a project.
- Equity crowdfunding. Sale of a stake in a company to a number of investors in return for investment.
- Rewards-based crowdfunding. The crowd donates to a project or a business expecting to receive a non-financial reward (goods or services) later.
- Hybrid models. Combining elements of more than one crowdfunding type.
- Revenue-sharing funding. Companies can share future profits with the crowd in return for immediate funding.
Listed below are the main crowdfunding platforms in Hong Kong that you could talk to. Remember, it is important to choose a platform that suits your business nature and needs.
Some of these platforms are supported by great VC firms while others are supported by angel investor networks. It is in your interest to examine each one properly, as many entrepreneurs have already found their luck using them.
Incubators / Accelerators
Hong Kong takes pride in the fact that it has a lot of incubator and accelerator programs to offer to companies. These alternative programs focus on different areas of interest which means that there will be no problems finding a program that suits your business nature and needs.
Incubators and accelerators are great not only because they offer funds, but also because most of them come with a mentorship program and a support network.
However, you should know how to distinguish the difference between these two. A business accelerator is a program that helps developing startups by providing funds, mentorship, or even non-monetary assets while an incubator is a program designed to help companies thrive through the early stages.
Hence, the basic difference between these is that accelerators receive funding from an existing company or network.
It often happens that incubators are independent although they can have connections to venture capital firms, angel investors, funds, universities, or government entities. On the other hand, incubators are mainly focused on stimulating innovation by incubating great business ideas.
- Accelerators – scaling a business
- Incubators – focused on innovation
Take a look at some prominent Hong Kong accelerator and incubator programs:
- Fintech Innovation Lab. This is a 12-week mentoring accelerator and incubator program sponsored and managed by Accenture. The program brings together the best financial services institutions, angel investors, and venture capital firms across Asia to provide new businesses with the opportunity to work with future customers, perfect propositions, gain insights into the banking industry, and build strong relationships.
- DBS Accelerator. DBS Accelerator is a startup acceleration program provided in partnership with the Hong Kong VC firm Nest. The program is targeted at fintech-focused startups at seed through Series B stages that address one of the following areas of focus: digital channel experience, compliance monitoring, credit digitalization, customer engagement, and cybersecurity.
- SuperCharger Fintech Accelerator. SuperCharger is an acceleration program designed for fintech companies that lasts for 12 weeks. This program does not take any equity and gives selected startups access to go-to-market resources, mentorship, as well as technology, and expert advice in areas such as market entry, regulatory obligations, and joint-venture opportunities.
- Moment Accelerator. This is Asia’s first regtech-focused accelerator. It was designed to enable startups and financial institutions to come together with the goal of accelerating industry transformation within the regtech and fintech space.
- Cyberport Incubator Programme. This incubator is designed for companies in the areas of fintech, AI, eCommerce, edtech, IoT and wearables, eSports, and ICT-related segments. The main purpose of this program is to support the development of the Hong Kong ICT industry by providing incubated companies with access to advanced facilities and resources, support in business development, financing, and hiring of graduate interns, as well as entrepreneurship and technology training.
Another great alternative when seeking funding is to pitch your idea to individuals who are willing to hand out the amount you need or provide other resources to make your idea a reality. This is where investor networks in Hong Kong come into play. If you have a team and a product that you think is promising, you are ready to start networking with investors in Hong Kong.
There are numerous events in Hong Kong that gather angel investors (rich individuals willing to invest capital in early-stage businesses), angel investor groups (networks of angel investors who pool their resources together to invest a lot of money into a business), and venture capital firms (large funds that provide large amounts of funding for later-stage businesses with proven growth.
Let’s take a better look at some popular events that might garner your interest.
Angel Investment Network Hong Kong
The Hong Kong Angel Investment Network is a network of more than 1,489,000 entrepreneurs and investors. It has been providing assistance to promising startups for decades. It saw a rise in popularity in 2004 when a lot of people were trying to set up a business in the region.
Back then, they knew that connecting individuals with the needed capital to aspiring entrepreneurs can only result in great achievements. Nowadays, the network has 30 branches extending to 80 different countries. There are around 1.4 million registered members with around 250k investors.
AngelVest Group is an organization that is always willing to invest in interesting and promising early-stage businesses (within Asia). They also provide a venue for portfolio companies to access mentorship from their accredited angel investors.
Big Bloom is another great angel investor organization located in Hong Kong. However, they have a modern approach to the whole pitching phase, depicting it as a date between two people.
The whole process is divided into five steps:
- Meeting in person
- Due diligence form
- Agreement signing (term sheets)
Ellevate is the largest community of women at work. This community creates partnerships of ambitious and supportive women who believe there is strength in numbers.
These ladies are willing to help each other no matter their background or aspirations with the aim of building a great career or business. More importantly, they mobilize their collective power to change the general business culture.
Dealing with traditional institutions and methods of acquiring funds should be mostly avoided by modern entrepreneurs. Even though many have found what they wanted by taking out a business loan, it is really a burden to deal with rejections just because of the lack of collateral or poor or insufficient credit scores.
Instead, search for alternative ways to fund businesses, as it is clear that options are ample. Ultimately, it is all up to you to decide whether you want to take them to your advantage or not. Talk to our sales team to get started!