Introducing Public Funding Schemes Supporting Start-ups in Hong Kong DR CHEUNG-KWOK LAW( 羅祥國博士 ) CO-DIRECTOR, APEC STUDY CENTRE, CUHK (29/11/2018) CHE UN G KWOK. LAW@CUHK.EDU.HK
Content I. Entrepreneurial Ecosystem: 8 Operational Features II. III. HKPC: SME One HKSTP & HKPC: TecONE IV. HKTDC: SME Centre V. HKTDC: China Business Advisory Service VI. HKTID: Support and Consultant Centre for SMEs VII. HKSTP: Incubation Programmes VIII. HKDC: Design Incubation Programme IX. HKTID: SME Export Marketing Fund X. HKMC: Microfinance Scheme XI. ITC: Tech Voucher Programme, XII. HKPC: Retail Technology Adoption Assistance Scheme 2
Entrepreneurial Ecosystem: 8 Operational Features: (World Economic Forum (2014)) 1. Accessible Markets Domestic/foreign markets Large companies as customers SME as customers Governments as customers 3
2. Human Capital / Workforce Management talent Technical talent Entrepreneurial experience Outsourcing availability Access to immigrant workforce 4
Friends and family Bank loans Angel investors Private equity Venture capital Others 3. Funding & Finance 5
4. Supporting System Government and semi-government organizations Mentors / advisors Professional services e.g. accounting, marketing, human resources, legal Incubators / accelerators Network of entrepreneurial peers 6
5. Government & Regulatory Framework Ease of starting a business Tax incentives Rental subsidy Low interest loan Business-friendly legislations/policies 7
6. Education and Training Available workforce with pre-university education e.g. high school, vocational training Available workforce with university education Entrepreneur-specific training 8
7. University as Catalyst Promoting a culture of respect for entrepreneurship Playing a key role in knowledge-formation and knowledge-transfer for new companies Playing a key role in providing graduates and relevant training Playing a key role in providing mentorship 9
8. Cultural Support Tolerance of risk and failure Preference for self-employment Success stories/role models Research culture Positive image of entrepreneurship Celebration of innovation 10
HKPC: SME One A centre set up by Hong Kong Productivity Council (HKPC) in July 2012 Aim to provide SMEs with informative/advisory support, such as Available funding schemes in HK and the Pearl River Delta region Market development financial subjects and latest IT solutions So as to enhanced SMEs operation and efficiency Located in HKPC with a total area of 4,000 ft sq. 11
HKSTP & HKPC: TecONE HKPC and the Hong Kong Science and Technology Parks jointly set up in July 2014 a one-stop resource centre for SME tech start-ups. Aim to: provide comprehensive informative/advisory services essential to development of SME Tech start-ups Public funding schemes Industry support programmes Business financing services 12
SME One & TecONE (Successful Examples) Case 1 Two young entrepreneurs selling coffee through apps, receiving advice from SME One and successfully obtained finance from HKMC s Microfinance Scheme and joined Incu-App Programme of HKSTP. Case 2 Another two young entrepreneurs applied for support from Cyberport Incubation Programme successfully after introduction and advice from SME One, to jumpstart their apps of construction materials sourcing. 13
HKPC: SME One (Enquiry Statistics) During March 2014 and March 2016, SME One handled >5,400 enquiries on funding schemes, organized >200 workshops and forums, attracted participation from about 8,500 SME representatives. 14
Fiscal Year HKPC: SME One (Enquiry Statistics) No. of Enquiries 2012/13 2,452 2013/14 3,575 2014/15 1,000 2015/16 4,400 Source: HKPC 15
HKTDC: SME Centre Set up by Hong Kong Trade Development Council in September 2010 It is a 16,000 ft sq centre for business consultation to SMEs, offers not only facilities such as business library, meeting areas, function rooms, but also business support services. It serves as a one-stop shop for HKTDC to i. introduce export marketing services to SMEs ii. provide practical information for new companies. 16
HKTDC: SME Centre Set up by Hong Kong Trade Development Council in September 2010 --HKTDC SME Advisory Service also provides 1-to-1 free business advisory service to SMEs and Start-ups, with the support of professional institutions in HK. --New entrepreneurs can obtain relevant start-ups information and exchange ideas with SME peers. 17
HKTDC: China Business Advisory Service Organized and provided by HKTDC China Business Advisory Unit Aim to--provide consultation service to assist SMEs entering the Mainland China. This Service is also supported by : China Ministry of Commerce Shanghai Municipal Commission of Commerce Department of Commerce of Guangdong Province Various Chinese enterprises and professional service providers in Hong Kong 18
Fiscal Year No. of Advisory Session HKTDC: SME Centre (Enquiry Statistics) No. of Workshop Organized No. of Workshop Participants 2010/11 1,100 24 2,300 2011/12 860 40 4,000 2012/13 1,180 35 3,000 2013/14 1,200 28 3,000 2014/15 1,293 34 3,775 2015/16 1,324 38 4,639 Source: HKTDC 19
HKTID: Support and Consultant Centre for SMEs (SUCCESS) Established by the Hong Kong Trade and Industry Department in January 2002 Aims to provide support to SMEs with business information and other services such as information on licenses and permits required in each industry business reference materials existing SME activities, services online facilities 20
HKTID: Support and Consultant Centre for SMEs (SUCCESS) Established by the Hong Kong Trade and Industry Department in January 2002 SUCCESS provides consultancy services. SMEs are able to consult experts by using Meet-the-Advisors business advisory service. SUCCESS organizes workshops and seminars aimed at enhancing SME s business knowledge and entrepreneurial skills. 21
HKSTP: Incubation Programmes Promoting entrepreneurship and IT talents 3 incubation programmes for 3 types of HK start-ups Incu-Bio Programme: a 4-year programme to nurture biomedical start-ups Max Grant: HKD 240,000 Incu-App Programme: a 2-year programme to support business innovation (e.g. web-based) in (i) electronics, (ii) green tech, (iii) information and communications tech (ICT), and (iv) material & precision engineering Max Grant: HKD 60,000 Incu-Tech Programme: a 3-year programme to assist technology start-ups to conduct R&D activities (same industries as above) Max Grant: HKD 60,000 22
HKSTP: Incubation Programmes Key Statistics Until January 2017, 447 incubatees obtained industry awards, 915 intellectual properties granted. 451 incubatees graduated from the programmes, with 74% remaining in operation. 4 companies undertook IPOs in the HK stock market. The incubation programmes raised about HK$1.7 bn angel and venture capital. 23
HKSTP: Incubation Programmes Eligibility An applicant must be a Hong Kong registered technology start-up company established for no more than 2 years before the date of application. Founding team members must hold more than 50% of the company. 2 full-time staff in the company. The team of full-time engineers and technologists must own at least 10% of the company's equity. 24
HKSTP: Incubation Programmes Supports Overview of Support Offered in the Incubation Schemes Venue and Equipment Office space and facilities Technical and Management Free job posting at HKSTP Industry and university collaborations Promotion and Development Business Support Financial Support Exhibition service Press release services Legal consultation Business plan consultation Potential investors connection Financial aid package 25
HKDC: Design Incubation Programme Nurturing design start-ups at the early stage, with hardware and software support. 2-year non-profit making programme operated by Hong Kong Design Centre (HKDC) since 2006. Aims to help design start-ups build their business networks publicize their products conduct market promotions. Incubatees will enjoy a variety of support services including ready-to-use office financial subsidies business development networking sessions 26
HKDC: Design Incubation Programme Eligibility (30 intakes a year) Company registered for 3 years in HK or oversea. 2 full time staff, 1 being a major shareholder and a designer in a recognised discipline. Shareholder of the applicant must not hold share in existing or graduated incubates. Incubates are required to achieve a set of milestones, assessing in 4 th, 12 th and 20 th month of the programme. At the end of 2016, 148 incubatees completed with 317 IP registered. 27
HKDC: Design Incubation Programme Supports Support Offered Financial Assistance in Operation, Marketing and Development Free & Discount Office Space Usage Business Centre Assistance Business Knowledge Enrichment Programmes Mentorship Programmes Business Outreaching Programmes Detail Max grant: HKD 260,000 Incubatees will be entitled to financial assistance in the different areas. Max grant: HKD240,000 During the 2-year incubation period, the incubatees are entitled to a ready-to-use office space for business operation. The incubation centres provide the most comfortable working environment, flexible working hours and completeness of equipment for incubation companies. Incubatees will gain access to different training programmes to enhance knowledge in business operation and design idea Mentors from different disciplines, including finance, accounting, legal contracts, IP, etc, provide incubation companies with guidance and advice on business operation. Marketing, promotion and collaboration opportunities. 28
HKTID: SME Export Marketing Fund Launched by HKTID in 2001 Aim to Encourage SME to expand overseas markets SMEs can apply for funding for their expenses due to their participation in export promotion activities. Max grant/application: HKD 100,000 or 50% of the total approved expenditure (Re-applicable) Max cumulative grant: HKD 400,000 29
HKTID: SME Export Marketing Fund Eligibility Registered business in HK Meeting HK government s definition of a SME Manufacturing business: employ 100 persons in HK Non-manufacturing business: employ 50 persons in HK Substantive business operations in HK 30
HKTID: SME Export Marketing Fund Funding scope Activities expenditures incurred by trade fairs or exhibitions outside Hong Kong, focusing on overseas or international audiences. Trade fair examples: Music Education Expo at London Belt and Road Summit 2016. Eligible expenses including: Stage Construction Set-up design Rentals for booths, advertisements Relevant brochures publications Electronic platforms development Websites or shops aimed at external markets outside of Hong Kong 31
HKTID: SME Export Marketing Fund Providing funds and supports for SMEs in expanding oversea markets. Year 2001 40,000 (Cumulative) Max Grant (HKD), Re-applicable 2003 80,000 (Cumulative) or 50% of eligible expenditure items 2008 100,000 (Cumulative) or 50% of eligible expenditure items 2013 200,000 (Cumulative) 50,000/application Or 50% eligible expenditure items Sep 2018 400,000 (Cumulative) 50,000/application or 50% of eligible expenditure items Applications received Applications approved Applications rejected Applications withdrawn Total amount of grants approved 263,616 221,332 37,507 2,114 HKD 3,394,456,000 Source: HKTID 32
HKMC: Microfinance Scheme Launched by HK Mortgage Corporation in June 2012 Collaboration with banks and non-govt organisations Aim to Offerring Micro Business start-up loan, self-employment loan and self-enhancement loan to assist people who wish to start their own businesses, become selfemployed or achieve selfenhancement through training, upgrading of skills or obtaining professional certification. Eligibility Individual aged 18 or above and holder of Hong Kong Identity Card or a One-way Permit. Not subject to any bankruptcy order or proceedings at the time of application. Passing vetting panel Interview with a valid business plan. 33
HKMC: Microfinance Scheme Application flow Step 1: Initial Screening Step 2: Business Plan and Entrepreneurial Training Step 3: Step 4: Step 5: Formal Loan Application Vetting Panel Interview Execution of Loan Document 34
HKMC: Microfinance Scheme Loan Terms Micro Business Start-up Loan Business Undertaken Maximum Loan Amount HKD 300,000 For the purpose of establishing a new business or conducting an existing business which has been established for less than 5 years (counting from the date of first business registration) Interest Rate Maximum Loan Tenor 9% per annum 8% per annum if a satisfactory third-party guarantee is provided 5 years 35
HKMC: Microfinance Scheme Key Statistics Key Statistics of Microfinance Scheme Cumulative figures (as at 31 Oct 2018) Application 457 Vetted 433 Approved 211 Rejected 222 Withdrawn 18 Total loan amount HKD 52.75 million Average loan size HKD 250,000 Average loan tenor 4.5 years 36
ITC: Tech Voucher Programme Launched by Innovation and Tech Commission (ITC) in 2016 Aim to Subsidies for all non-listed enterprises in using technological services and solutions to improve productivity, upgrade or transform their business processes. Eligibility HK registered companies under the Business Registration Ordinance. Substantive business operation in HK at the time of application. Approved by TVP committee. 37
ITC: Tech Voucher Programme Key Statistics TVP Key Statistics HKD Approved applications 780 Maximum funding amount 200,000* Average funding amount 137,144 Minimum funding amount 7,100 *Project Title: Upgrading the Homecare Services Management System to an Electronic Platform Source: ITC; last updated on13 November 2018 38
The Retail Technology Adoption Assistance Scheme Implemented by HKPC in 2016 Aim to Provide funding support to adopt relevant information and communications technology and other technologies: POS (point-of-sales) system Inventory system Electronic payment system Radio-frequency identification (RFID) system Security system e-shop Eligibility--Substantive retail business operations in Hong Kong Funding Amount Enterprise will be funded for a maximum of 50% of the total approved project cost. Up to two projects from a single applicant may be approved, subject to the cumulative ceiling of funding support of $50,000. 39
The Retail Technology Adoption Assistance Scheme Scope of Funding Projects must be related to the management of manpower demand of the applicant, improving productivity. Other projects, such as projects solely to promote the business of the enterprise, are not eligible for application. Only expenses directly related to the project can be funded. Daily operation costs of the enterprise are not eligible for funding. 40
A HK Start-up Survey Inviting Your Participation About The developments and challenges of start-up businesses in Hong Kong. Objectives Understanding the operating status, technology level and ecosystem of start-up businesses in Hong Kong; Reviewing their possible interaction and operation in the Greater Bay Area; and Assessing their short-term business prospects, challenges and opportunities. Research findings would be provided to the relevant authorities in Hong Kong and the Greater Bay Area for their policy considerations. 41
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