Editor’s note: TNGlobal’s reporter was invited to attend Cyberport Venture Capital Forum 2024 (CVCF 2024). (sponsored)

In the second part of the interview, Cyberport Chief Public Mission Officer Eric Chan shared Hong Kong’s uniqueness and competitive edge against other cities in China and across the region which also aimed to become tech hubs. He shared suggestions on how Hong Kong can further improve its tech ecosystem and his views on Southeast Asia, the Middle East, the Greater Bay Area and the competition with Singapore.

“We have strong teams here in Hong Kong, but in other parts of the world, we have to work with our partners. So, it’s more about collaboration rather than competition,” he told TNGlobal in an interview at the Cyberport Venture Capital Forum 2024.

“In the past, we have been doing a lot of work to connect with the US and Europe. But in recent years, we put a lot of emphasis to develop a similar type of partnerships for the ASEAN countries, even in the Middle East,” Chan said.

“Any entrepreneurs that have aspirations to become unicorns, they have to operate in multiple markets. Hong Kong is a very small market with about 7 million people. We need a much bigger market,” he added.

Since its inception, Cyberport Investors Network’s total investment amount has reached over HK$2.597 billion ($334.1 million). As of September 2024, Cyberport Macro Fund has invested in 28 start-ups projects, the total investment amount of CMF and co-investments has exceeded HK$1.94 billion ($249.3 million).

In the interview, Chan also shared how Cyberport Investors Network and Cyberport Macro Fund played their roles to support startups, among others.

Below are the edited excerpts:

Many cities in China and Southeast Asia such as Malaysia, Singapore also aim to be a regional tech hub. Where does Hong Kong’s tech ecosystem stand? What are the competitive edge of the tech ecosystem here? What are the challenges it faces?

Basically, we are working with all these countries, and we believe that the tech ecosystem has to be a connected system. We cannot do it all alone. We need to work together. So at Cyberport, we try to connect Hong Kong tech ecosystem with the other vibrant ecosystems.

In the past, we have been doing a lot of work to connect with the US and Europe. But in recent years, we put a lot of emphasis to develop a similar type of partnerships for the ASEAN countries, even in the Middle East.

We have a comprehensive support system. For Cyberport, we have been in operation for 21 years. Our incubation program has supported over 1,300 incubatees, and now we are home to eight unicorns and one listed company in our community.

We have a proven track record, and there are things that we can offer to other counterparts. Our goal is to connect and work together. As we are speaking, my team is bringing 16 startups to Malaysia to attend the MDX invited by Malaysia Digital Economy Corporation (MDEC).

The partnership with MDEC partnership is supported by the Consulate General of Malaysia in Hong Kong, and they introduced us to MDEC. We have signed a Memorandum of Understanding (MOU) a few years ago, and this time, while we are in Malaysia, we will be renewing our MOU with MDEC, and hopefully we can work with MDEC to give the necessary support to our startups which have the ambition to expand into the Malaysian market… typically [include] market access, funding access, landing support.

We have strong teams here in Hong Kong, but in other parts of the world, we have to work with our partners. So, it’s more about collaboration rather than competition. Any entrepreneurs that have aspirations to become unicorns, they have to operate in multiple markets. Hong Kong is a very small market with about 7 million people. We need a much bigger market.

For example, one of our unicorns, Klook. They are operating in over 20 countries including Malaysia. So we need support from our counterparts.

What are the plans for Cyberport Investors Network and Cyberport Macro Fund moving forward?

Apart from incubation, providing mentorship, training, funding support, we need to connect our startups to the relevant investors first. A number of years ago, we decided to create Cyberport Investors Network. Basically, they are the investors who sign up to regularly look at our projects for investment purposes.

Different investors have different risk appetites and focus. We gather many of them in our network and hold regular investor-matching sessions to ensure many of our startups are not short of funding, especially on their scale-up journey. Once they are proven, once they are on track, they will have businesses. And then they need more funding. That’s the part you want to make sure they get the necessary funding.

Secondly, a few years ago, we decided to set up our own VC funds. We call it Cyberport Macro Fund (launched in 2016, according to Cyberport’s newsletter) so that out of all these incubatees that we support, we will selectively invest in some of them.

The reason is that we want to endorse some of the quality startup. So when we invest, we will attract co-investors. And historically, we have a successful track record. For every dollar we put in a company, we managed to attract another $9 to $10 from other investors. So this multiplier effect is important and provide a big support to our startups.

For example, if we write a cheque of $10 million investing in a company, easily, they get $100 million in the same round. That’s very important, especially for those scaled companies.

We are also diversified. Our investor network covers not just VCs, we have angel investors to invest in earlier-stage startups. We have also attracted corporate ventures, big companies, that want to invest in technology, and even private equity firms. Sometimes, high net-worth individuals and family offices too.

We want to make sure the funding support is always available. You probably have heard over these two days (at the CVCF), that it is getting more difficult [to get funding] because of the [slower] global economy and the GDP growth. But then, from Hong Kong’s perspective, we are still okay In terms of the early-stage investment.

We have gathered a lot of investors in our network, and over the years, our community members have raised over billions of dollars. (As of August 2024, Cyberport Investors Network raised more than HK$2.597 billion for 96 investment-matching projects since its establishment in 2017.)

What we need to work on is the scale-ups. We are doing ‘okay’ in terms of helping companies to grow from zero to one, from zero to 10. But how do we help them even more to go to 1000 to 10,000? The later-stage part we are also doing okay because Hong Kong is a financial center, the IPOs, we are also experienced.

The ‘middle part’ to [help startups to scale up] is improving. As you have probably heard recently, the [Chief Executive’s] policy address, the Hong Kong government has noticed this is important and they have introduced new schemes supporting acceleration, some new funding to support accelerator, to help our tech companies to scale.

That’s good news to us, so we will definitely be tapping on this new resources, apart from the existing support from the government.

Who are the members of Cyberport Investors Network, are they from all around the world, or they are only from Hong Kong?

We are seeing more from Mainland, China. But then the emerging, potential high growth will probably be the Middle East. That’s why in March it was our first time to participate in LEAP Conference in Riyadh, Saudi Arabia, where we opened a Hong Kong Pavilion and we showcased a number of our startups and solutions.

We also have developed a partnership with Dubai Future Foundation, they are the investment arm of the ecosystem. We will explore further UAE countries. We have startups already operating in the Middle East, and they act as good brand-building for us, because they have already penetrated those markets. Sometimes we even work with our community members to tap into that ecosystem and develop further collaboration opportunities.

Southeast Asia – There are more tech startups from Hong Kong expanding to Southeast Asia. What are the opportunities Cyberport sees in Southeast Asia? Any particular country/ sector has the most opportunities for startups from Hong Kong?

The most valuable part of Southeast Asian is the market. Many of our good companies, no matter where they are from, have the ambition to expand in multiple markets. We need customers and markets for them. For example, Malaysia, and Indonesia, these markets are yet to be explored. Many of our startups are aggressive and ambitious in exploring those markets.

We are all building smart cities, right? There is a lot of smart city solutions that we want to export to help many Southeast Asia countries to build their smart city and vice versa.

We also welcome good smart city solution providers to come to Hong Kong, and we will help them find possible business opportunities in this part of the region.

Secondly, I would say FinTech. We have over 450 FinTech companies, and I guess many economies are driving the digital transformation of the finance industry, which is important and a driving force to many countries and cities.

With the experience that we have, doing all these proof of concept, testing and pilot implementations, we think we have something to share with our neighboring countries.

Then it’s AI and Web3, we are putting a lot of emphasis and hopefully, there are things that we can collaborate on. We need to work together for mutual benefit.

When we talked to Hong Kong Science and Technology Park a few months back, they mentioned that Singapore, Thailand and Malaysia are their priority markets for them. For Cyberport, are there any preferences or priorities within Southeast Asia?

Those we have started [collaborating] are Malaysia, Indonesia, Vietnam, Thailand, Korea, Japan. These are the ones that we have started partnerships with. Middle East, UAE and Saudi Arabia, in support of the Belt and Road Initiative, are the top priority countries.

The MENA region includes the Middle East and Africa. We have some inroads in the Middle East, but the Africa part, we haven’t done much yet.

But so far, there is a lot of interest from Africa. Yesterday, I met a few of them [at the CVCF], and they were amazed about the vibrancy of the tech ecosystem in Hong Kong, and they are considering expanding to Hong Kong through Cyberport. Some of our startups have already started operating in Africa.

One of our InsurTech companies, CoverGo, an InsurTech or digital enabler for traditional insurance company. They started in Hong Kong and were incubated by us. The founders are from the Republic of Czech. They brought the business back to Europe and US.

One or two years ago, they started operating in Africa. So we do have startups expanding globally, including Africa. We are interested, as long as there is business, funding for our startups, but we have yet to develop strategic partnerships.

One of our strategies is to find a good partner in those countries. To be honest, we cannot afford to put people everywhere. So we work through partnerships. We are still figuring out the right strategy for us.

In the meantime, we want to deepen our relationship with those existing partners and try to drive impactful results from those partnerships.

For example, the partnership with MDEC was formed during COVID. But then, because of COVID, we cannot visit Malaysia. So now we are catching up, and we are bringing 16 of our companies to Malaysia. We want to go to Malaysia, and explore on how to get support. These are our major focus in the coming years.

We have developed various partnerships, and now it’s the time that we drive results of those partnerships and further explore the scope of collaborations.

The Greater Bay Area (GBA) has become a buzzword in recent years. How will the Greater Bay Area development have an impact on the tech ecosystem in Hong Kong?

The Greater Bay Area is a national policy from China with the aim to create this bay area with nine cities from Guangdong province plus Hong Kong and Macau, 11 cities to become one engine so that we can compete with San Francisco Bay Area or the Tokyo Bay Area.

I come up with this story: Nine plus two is 11. It’s like a football team. We want to create this as a football team, not to compete against each other, but to form a team to compete in the World Cup. We want to bring a lot of good technology and solutions to the global market to compete with any other Bay Area of the world.

Obviously, we have started creating the synergy. For example, we signed an MOU with Qianhai in Shenzhen. They have a similar park, like Cyberport and now they have a matching fund. Those who were admitted into to the program, will be provided similar support when our company expands also to Qianhai. This is one of the things we are working on, so that our companies can go to Qianhai free of charge to enjoy the facilities there, and vice versa.

To Hong Kong, the GBA is already a market. But I think from a more strategic perspective, it’s not just the market we are looking at, but more about connecting the dots within the GBA.

For example, Dongguan has great manufacturing facilities. Shenzhen has a lot of technology companies and there are others that have natural resources with logistics support. We want to connect all these cities to make it a very efficient engine so that we can play the World Cup and win the World Cup!

So for GBA, is there any particular technology in focus?

I think it’s very similar to what I described for ASEAN countries. Everybody’s building smart cities and pushing for financial innovations. These two are our key focuses.

One emerging sector I also want to mention is e-sports and gaming. E-sports is becoming a big industry. Probably you have heard the new game Black Myth: Wukong that was out in China, has just created a wow factor. We have been supporting and developing digital entertainment clusters, which include eSports and gaming. In Cyberport, we have an atrium that can be converted into an eSports arena. We have the support from the government to build the necessary infrastructure and use that place when it is needed. We have already organized several international tournaments there.

In Southeast Asia, Singapore is also trying to be a regional tech hub. Hong Kong and Singapore, it’s often like the Tale of Two Cities. Both cities are always being compared. The Singaporean government is also very supportive to the tech ecosystem. There are also similarities. Singapore is also using Common Law, both are financial hubs. How do you actually see Singapore, as a competitor or …?

We always get this question. Yes, Singapore is a competitor, as well as a partner for collaboration.

Definitely, there are things that we can learn from Singapore and but then we do have our uniqueness that I personally believe is incomparable.

For example, we have the main Chinese market and the support from China. That’s something quite unique to Hong Kong while Singapore, they focuses very much on Southeast Asia. They want to be the hub for Southeast Asia.

For us, we have even bigger ambitions, and we want to connect China with the rest of the world, But then within the region, I think there are areas that we can work together. There are areas that we compete with each other.

Something that we need to learn from Singapore is they do a very good marketing job. That’s something that definitely we need to learn from them.

#TechEcosystem #SmartCities #StartupFunding #GlobalCollaboration #GreaterBayArea #Ifvex