Why Raising Startups Takes More Than Just Money

Building Startups Requires More Than Just Financial Support

By Jayne Chan, Head of StartmeupHK

COVID-19 has been a disruptor as it inspired radical changes to the way we live, work and interact with others.  There are many lessons to be learnt, such as the critical need for young enterprises to acquire the right skills in order to weather future storms. That is one of the reasons why both the public and private sectors are called to invest in startups – not just in cash, but also in time, expertise and connections.

A wholistic community of players

For startups to thrive, we need a wholistic community of players that involves universities, public and private enterprises, and governments.

In the last 80 years or so, universities have become key drivers in the startup scene. Silicon Valley, which, if it were a country, would be considered amongst the richest in the world with US$128,308 GDP per capita. The world’s foremost tech hub owes a large part of its success to Stanford University supporting and aligning its interest with tech companies and fostering entrepreneurship among its student body.

Nowadays, as the world is still struggling to wrap its head around the newly emerging COVID-19 variants, the role of universities is more important than ever in supporting startup development. According to a recent research by Youth Co: Lab,  92% of sampled youth-led enterprises in the Asia-Pacific region were set back by the pandemic as they failed to steer their businesses through lockdowns, changes in consumer behaviour, broken supply chains and credit crunch. On the other hand, some university-led entrepreneurship projects, including Oxford University spin-off Vaccitech, have achieved milestone success.

But how do we foster a culture of entrepreneurial behaviour? For universities, they need to provide an environment that defies the norms. An entrepreneurially-minded university sees learning as a reciprocal process where students contribute to the institution’s growth, and uses its network to connect students with the business world so that external entrepreneurs can provide funding, knowledge transfer, and mentorship.

Hong Kong, with five of its universities in the Top 100 of the QS World University Rankings, has a number of initiatives to support student entrepreneurship. The Entrepreneurship Minor Program at the Hong Kong University of Science and Technology is a perfect example, incorporating knowledge transfer, mentorship, competitions and funding. Meanwhile, the University of Hong Kong has introduced its latest Technology Startup Support Scheme, enlisting successful companies founded by its students, who may receive a maximum of HK$1.5M for up to three years. City University of Hong Kong, on the other hand, aims to create 300 startups in three years through its HK Tech 300 scheme.

Governments also need to play their part in identifying opportunities or gaps in its startup ecosystem, and develop appropriate policies to support the growth of the startups. Regular review of requirements, incentives, and tax exemptions for young entrepreneurs should be on the card. Hong Kong-based startups, for example, are reaping benefits from the joint-policies in the Greater Bay Area. A Hong Kong/Shenzhen Innovation and Technology Park is now underway, where innovators can connect across the border with reduced bureaucratic burden under the Memorandum of Understanding signed between Hong Kong and Shenzhen.

The roles of enterprises: funding, knowledge and mentorship

For the next generation of startups to prosper, private enterprises should be open to deploying technology from startups which could give them an edge, and benefit the startups through hard to get sales in those early years. Another way for big companies to help would be to create dedicated investment funds for empowering the next generation of entrepreneurs. Here again, Hong Kong boasts a solid ecosystem, with large enterprises going the extra mile in supporting startups, be it the HK$1 billion Alibaba Entrepreneurs Fund, or the accelerator programmes by The Mills Fabrica, PwC and KPMG.

Setting the stage for tomorrow’s success

It takes a village to raise children. In the same manner, a closely knit community of universities, entrepreneurs and governments will provide the right kind of environment and opportunities for startups to learn, to mature, and to flourish even in the toughest economic climate. We don’t know what tomorrow may bring, but we do know that our future starts with the choices we make today.