For the first time ever, a Hong Kong government-owned body is injecting money directly into the technology business ecosystem. Allen Ma, CEO of the Hong Kong Science and Technology Parks Corporation, the statutory body behind the $6.5m corporate venture fund, discusses the success stories from HKSTP, and the corporation’s plans for the fund.

The New Economy: Hong Kong startups are receiving an extra $6.5m over the next few months, courtesy of the Hong Kong Science and Technology Parks Corporation, the statutory body in Hong Kong driving the city’s innovation development and grooming technology start-ups. It’s the first time that direct investment has been injected in young science and technology companies from HKSTP. 

Joining me is Allen Ma, CEO of the corporation; Allen, tell me about Hong Kong’s start-up scene. What kind of young businesses you supporting? Tell me about some of their innovations.

Allen Ma: The start-up scene in Hong Kong actually has been extremely promising. Firstly, over the last couple of years the number of newly registered companies has gone up by almost 100 percent. And we are the biggest incubator in Hong Kong. We are incubating more than 175 companies right now. In the last two years the number of applicants has actually gone up by more than 100 percent.

Today we are investing into five technology clusters: electronic, ICT, green-tech, biomedical, to new materials and precision engineering. All these five technology clusters, are going to affect the way we serve the ageing population, the way we are going to build smart cities and how we are going to use robotics for our re-industrialisation in the next five to 10 years.

A couple of early success stories so far. We have groomed a company called Vitargent, which makes use of a technology started from the City University of Hong Kong. And they have now been able to use DNA modified fish to find out whether a certain type of food or solution contains a toxic substance in it.

In the electronic area we have also groomed a company that has built, what we call a ‘Hand of Hope’ to help people who have stroke problems to rehabilitate.

So there are many successful stories that we have groomed across these five technology clusters.

The New Economy: How do you identify the companies that you want to support? Do you choose them for their commercial viability or their innovations for good?

Allen Ma: You know, in our industry we have a saying that we do not bet on the horse, we bet on the jockey. So the centre of attention is on the entrepreneur: the founder of the start-up business.

We look at whether he is really creative, is willing to take risks? Does he have the entrepreneurship? And also, does he have a good business sense?

At the end of the day it’s about translating ideas into things that have a market. And that’s why we have to go through the entire journey of commercialisation.

The New Economy: Now this $6.5m you’re investing is the beginning of your corporate venture fund. Tell me more about this.

Allen Ma: This is a co-investment fund. Essentially, we’ve put out $6.5m and we hope that we can find other matching funding to the same level.

The companies that we are willing to put our money into are essentially companies that operate within the Science Park or companies who have graduated or are still in an incubation programme. So you can understand that we know all these companies, including their founders, extremely well.

So it’s a kind of low risk approach to start with. The significance of this programme is really that a Hong Kong government-owned statutory body is putting money into the ecosystem and we hope to groom the people and give them some help during their seed-funding phase.

The New Economy: Now, here in London there has been some criticism of our incubators – that they are not really adding value to the companies they are supposed to be serving. That they’re basically nothing but glorified office spaces. What’s your take on this?

Allen Ma: Interesting comment. Our company has about roughly 15 years of history. To be very frank with you, when we started this company, people perceived this as really the government putting money forward to build infrastructure.

Over the last 15 years, we have transformed. We have moved away more and more from a facility and infrastructure based business model, to what we call a service-based model now.

The wide range of services that we are offering ranges from what we call Industry Connect: we connect the people here into the various industries, so they can see the marketplace and see the supporter.

We also have a programme called University Connect, where we connect a company here with innovators in the university, so they can meet and find ideas that can be commercialised. And we provide a full range of business support services. So it’s really a service-based model that we are offering, and I believe it’s the right model to move forward.

The New Economy: I am glad you mentioned University Connect, because your chairperson Fanny Law recently said that Hong Kong Science and Technology Parks hasn’t really enjoyed the support from academia, since your inception, that really you would wish for. What are you trying to do to address this?

Allen Ma: The trouble we have in Hong Kong is that although we have well-run universities, the right number of students, graduate students going through post-doc programmes. And very good, world-class university professors – but not too many of them are willing to take risks.

And what we are trying to do is to go into the university to reach out to those professors or research people and encourage them to at least come to the science park and talk to the people there. Demonstrate what they have done in their basic research and hopefully through this connection, we will have entrepreneurs talking to the right research professor and pick ideas and start the commercialisation journey.

What we are doing today is, a three C strategy. Three C means connecting the dots, collaborating with people, and catalysing their ideas.

By connecting people, they will be able to find partners and spark ideas. Collaboration between industries and entrepreneurs. Collaboration between university professors and entrepreneurs. And the last C is about catalysing: it’s about accelerating the path of innovation. And by providing all the support services at the science park, we believe we will be able to help them accelerate.

The New Economy: Finally, what is it about Hong Kong that is attracting science and technology firms?

Allen Ma: Actually, Hong Kong is unique in a number of ways. In terms of innovation technology, firstly we have a well-run university. Secondly in research and technology – you need to think about IP protection when you have the result. In Hong Kong we have the British-based rules of law, and people respect IP. And thirdly when you are into operation you think about the tax system. We probably operate the simplest tax system in the world.

We offer the lowest tax rate for entrepreneurs – so this is very important. If you look at the infrastructure – particularly ICT infrastructure – we probably run the world’s best broadband Internet and wireless communication infrastructure. All these are very important, for people to start their innovation technology businesses.