Many people seem to have strong thoughts about the proposed budget 2015/16 that was just announced by the Hong Kong government. If you’re interested you can read the budget announcement and speeches in detail at: www.budget.gov.hk So, I thought I might comment on the “Start-ups” sub-section (paragraphs 38-48) of the “Developing Our Economy” section of the budget speech. Disclaimer: I am not particularly qualified to professionally comment on the measures proposed. Therefore, everything that follows is my (Patrick Kosiol) personal view on things. Entrepreneurship I absolutely agree with the statement that Hong Kong is being hit by a new wave of entrepreneurship. Though, I had argued before that Hong Kong has a long-standing tradition of entrepreneurship in trading business. It is true that Hong Kong needs to get itself ready for the new companies and business models that will hit the territory. That is inevitable to happen and Hong Kong’s laissez-faire approach to business allows – and most importantly encourages – that. A very simple example for this is Uber which has launched its disrupting services in many countries in the world, including in the Hong Kong SAR. InvestHK I do also welcome the fact that Hong Kong’s InvestHK has received its own mentioning in the speech. I have personally met several InvestHK folks (from various of their departments depending on which industry you’re interested in) and they have been very forthcoming. While I have to say that neither I personally nor any of the companies I co-founded had some direct benefit from working with InvestHK, I do very much appreciate their work and effort they put into enabling companies to launch in Hong Kong, establishing business relations with local as well as overseas companies and hosting networking events. Cyberport & HKSTP The mentioning of Cyberport and the Hong Kong Science and Technology Park is also encouraging. While I am sure both have received similar exposure in recent years, they do their part in nurturing their specific target groups of entrepreneurs. In 2011 Boris and I where among 3 co-founders who started a company called TreeCrunch Limited with which we did apply for the Cyberport Creative Micro Fund (CCMF) and were accepted to it. A CCMF-funded project runs for 6 months and when accepted you get access to a HKD $100,000 grant from Cyberport. After TreeCrunch had graduated from CCMF, we applied for and got accepted to the Cyberport Incubation Programme which is a 24-month program that gets you access to grants and resources worth up to HKD $530,000. In 2012 we started working on our Sky Drone project which is still ongoing. We applied for the CCMF in their 2014 summer recruitment and got awarded the grant as well. Just recently Sky Drone graduated from the CCMF program successfully. So in short: the Cyberport programs have helped us as startups already. Previously, we did not find a matching program at the Hong Kong Science and Technology Park. That was very unfortunate at the time, but from what I can see, they have revised their programs and are now offering more broadly targeted programs outside the mobile gaming and biotech industry. That is great news for Hong Kong! Government Data Going Public Now, what really excites me is this paragraph:
46. From this year onwards, free online government information will be released in digital formats to encourage development of more applications by start-ups. Many start-ups have developed a wide range of mobile applications by exploiting such public sector information, including information on real-time traffic and weather conditions.
I love open data. Some countries in the world are embracing that concept and especially the United States of America are at the vanguard of it. Basically, any data produced by any federal US government agency is to be published in the Public Domain unless it is data that needs to be treated confidentially. I truly hope Hong Kong adopts a similar model. On top of that, I hope Hong Kong government departments will publish such data in a manner and format that allows easy programmatic use. $5 billion for the Innovation and Technology Fund (ITF) Now in paragraph 44 the speech outlines how an additional $5 billion injection in the ITF is expected to strengthen support for relevant enterprises:
44. In addition, the proposed injection of $5 billion to the Innovation and Technology Fund will help strengthen support for relevant enterprises.
So let me tell you a quick story about that ITF. I have not met one person who can confirm to have received funding from ITF. Perhaps I just know the wrong people. Yet, with TreeCrunch (mentioned above) we did apply for the ITF’s Small Entrepreneur Research Assistance Programme (SERAP). It’s a mouth full, I know. Not just that, it’s also hand full of work to apply for that. Granted, you can now “get funding support of up to HK$6 million will be provided on a dollar-for-dollar matching basis” which is a significant amount and it’s absolutely justified that you got to work hard to get access to it. So back in 2012 we applied for SERAP with a project that was targeted at a duration of 18 months. We were looking for $2 million of matching funding (which basically comes as an interest-free loan). There was quite some bureaucracy involved in the process of applying which could definitely be optimized. Anyhow, in the end we did not get the SERAP funding we hoped for, because – according to the judging panel and after many many attempts & begging to get detailed feedback – our technology was apparently near completion and we had “low Innovation and Technology” content. To be precise, this was the official explanation:
The Panel was of the view that the project was commercially viable and the project team had capability to carry out the project. Nonetheless, apparently the bulk of the R&D work involved seemed to be near completion. The Panel considered the remaining work had low I&T content. Hence, the application was therefore not supported for funding.
Perhaps we presented our solution too well, because it was far away from being finished and TreeCrunch basically ran out of money 4 months later — before we were able to finish it. But that’s a different story, I am happy to talk about over a beer. Furthermore, our whole product and service was building on natural language processing which in its very nature is an extremely innovative and technology-heavy field. At least in my opinion. There is one phrase I remember very vividly when thinking about SERAP. During our discussions with them it was mentioned to us multiple times that: “The panel has to decide carefully who they are giving money to because it is public money. They can not take any risk and need to make sure the loan can be recovered.” While I absolutely understand the reasoning behind that, it might be good get past the fact that supporting startups and entrepreneurship is about taking risks. If you want to support startups you got to take risks. Period. It is about putting your money where your mouth is. If you really want to support innovative startup companies, from time to time you got to take a leap. The full budget speech PDF can be downloaded right here: http://www.budget.gov.hk/2015/eng/pdf/e_budgetspeech2015-16.pdf