Stanford EE402T 2012: Hong Kong Startup & Funding Between Hong Kong and US
Stanford University US-Asia Technology Management Center School of EngineeringEE402T Entrepreneurship in Asian High Tech IndustriesHong Kong Startup and Investment Funding Between Hong Kong and US Part 1 香 Bess Ho Founding Partner of Archimedes Labs Spring 2012 @Stanford 港
Ofﬁcial Language• English • British English (Written) • Hong Kong English (Verbal)• Chinese - • Traditional Chinese (Written) • Cantonese (Verbal)Hong Kong
Language• Hong Kong English 港式英語• British English• American English Hong = Fragrant Kong = Harbor
• Before 1842 The name Hong Kong is referred to Aberdeen Harbor - between the Aberdeen Island and the south side of Hong Kong Island.• This small inlet, Aberdeen Harbor, is nick named as “Little Hong Kong”.• First points of contact between British sailors and local ﬁsherman. Hong Kong
Hong Kong• Land: 426 sq. miles• Population: 7 Million• British Empire Colony after First Opium War since 1839• British Hong Kong - Crown Colony British dependent territory under British Administration from 1841 to 1997• Return to China in 1997
Hong Kong SF Bay Area China including Silicon Valley• Land: 426 sq. mi • Land: 3,524 sq. mi• Population: 7 Million • Population: 7 Million
• Imperial (221 BC -1800s) - Qin Dynasty• British Hong Kong • Colonial (1800s-1930s) • Occupied (1940s) - 3 years 8 months • Modern Hong Kong (1950s-1997) • Hong Kong SAR (Present)HK History Timeline
• British Hong Kong Before 1997• Old Hong Kong Web 2.0 Era 2004-2008• New Hong Kong Post PC Era After 2008 HK Startup Timeline
TOM Online• Chinese version of Skype. Online Advertising. Wireless Internet.• TOM group is controlled by Li Ka Shing.• TOM.com (HKG:2383) listed on Hong Kong Stock Exchange via Growth Enterprise Market HKGEM in 2000.• Listed on NASDAQ in 2004.
SuneVision 新意網集團有限公司• SUNeVision (HKG:8008) listed on Hong Kong Stock Exchange via Growth Enterprise Market (HKGEM) in 2000.• IPO priced at HK$10.38 per price• IT company under Sun Hung Kai properties, largest property developers. Internet services, security surveillance system, etc.
• Alibaba.com • Google.com $1.7 Billion IPO $1.67 Billion IPO in Hong Kong on NASDAQ in Stock Exchange 2004 (HKSE) in 2007
Alibaba 阿里巴巴網絡有限公司• World largest online Business-to-Business (B2B) trading platform for small businesses.• Founded by Jack Ma and 18 people in 1999.• Tony Yiu, Hong Kong co-founder, once CIO• Biggest IPO by a Chinese Internet Company.• Underwritten by Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley.
Alibaba 阿里巴巴網絡有限公司• IPO raised HK$13.1 Million (US $1.7 Million). Priced at HK$13.5 in 2007• Sold 858.9 Million Shares ~17%• Company valuation HK$8.8 Billion
Belle International Holdings Limited 百丽国际控股有限公司 • No.1 women’s shoe retailer in China • Founded by Deng Yao in 1981 in Shenzhen, Guangdong Province. • IPO raised HK$1.1 Billion on HKSE in 2007
• Chinese version of Skype. Online Advertising. Wireless Internet.• TOM group is controlled by Li Ka Shing.• TOM.com (HKG:2383) listed on Hong Kong Stock Exchange via Growth Enterprise Market HKGEM in 2000.• Listed on NASDAQ in 2004.
According to Business Weeksreport in 2011, HK topped theWorld Economic Forums 2011index of ﬁnancial marketdevelopment, supplanting U.S. andU.K. from the highest rankings forthe ﬁrst time. HK jumped fromfourth making it the ﬁrst Asianﬁnancial center to lead the 60-country index, helped by IPOs andinsurance.
Startup Funding Process Micro Seed Angel VCFunding Funding Funding FundingMerger / Acquisition Initial Public Offering (M&A) (IPO)
Successful HK Startup • No.1 in Asia Smart Card supplier • Top 3 in PC- linked smart card reader
Advance Card Systems (ACS) • Found in 1995 • Incubated at HK Science & Technology Park • IPO in HKSE • SEHK:8210 Danny Wong CEO & Founder
Advance Card Systems (ACS) • Winner of Product Quality Leadership Award • Forbes Asia’s “Best Under a Billion” - Sales between US $5M-1Billion
Success Elements • Lowest cost. Closest to manufacturing factory • Go outside HK / China, Worldwide • Go to new markets ﬁrst & faster worldwide • IPO at HKSE to establish business credits • Good solid business reputation • Spend 60% on R&D Innovation - new products • Family Businss - 300 EE Worldwide
1GSMA Mobile Asia Congress App Bytes’s MAC App Planet Sponsored by WIP Connector Hong Kong Convention and Exhibition Centre
• The Muther! of all Hackathons at Computer History Thibaut Roufﬁneau MuseumVP Developer Partnerships attracted over WIP Connector 500 mobile Moderator developers
• Facebook announce to open a Sales ofﬁce in Hong Kong in Feb 2011 • It’s Facebook David Lim 2nd ofﬁce inMobile Partner Engineer Asia. 1st ofﬁce Developer Relations & Asia HQ is in Facebook Singapore. Panelist
• Airpush is ﬁrst mobile ad network based on push- notiﬁcation • Android based only Inman BreauxVP of Publisher Relations Airpus Panelist / Sponsor
HK Science & Technology Park • Co-working Space • Startup Event • Startup Accelerator Program
Attracting Startup Founders Doing Business in HK
Attracting Startup Founders Doing Business in HK • Raised $9M Round • Foundry Group David Merrill • True VenturesCo-Founder of Siftable
Attracting Startup Founders Doing Business in HK • Funded by Archimedes Labs Idan BeckFounder of Incident Tech • Guitar Hero for Guitar Player
HK Startup Challenges Micro Seed Angel VCFunding Funding Funding FundingMerger / Acquisition Initial Public Offering (M&A) (IPO)
Signs of Improvement HK Gov Micro Seed Angel VCFunding Funding Funding Funding
• Cyberport CCMF HK$100K• PolyU Micro Fund HK$100K• Hong Kong Science Park HK$100K Hong Kong Government Supported Micro Funds US$13K Grants / No Equity Matching Fund Not 100% Reimbursement Spend ﬁrst
Hungry Games Micro Seed Angel VCFunding Funding Funding Funding
Hong Kong BusinessAngel Network (HKBAN) • HK Government supported effort to organize angel investors in investing in HK Startup
Signs of Improvement HK Gov HKBAN Micro Seed Angel VCFunding Funding Funding Funding
Hong Kong BusinessAngel Network (HKBAN) Hong Kong Incubators • Cyberport • HK Science & Technology Partk
Hong Kong BusinessAngel Network (HKBAN) Hong Kong Top 4 Universities • HKUST • CU • HKPU • HKU
China Hong Kong 香港 Euro US$Malaysia Singapore
Wonder why those US tech companies put Singaporefirst, HK second? Heard there are more IT talentsthere. True or not?Google, Linkedin put Singapore as SE Asia’sheadquarterFacebook open Singapore office first then Hong Kong
Signs of Weakness• Not enough mentors to guide HK startup founders• Not attracting experts and talents from Silicon Valley• Good example: HK is losing Jason Hoffman to Singapore Jason Hoffman Co-Founder & CTO of Joyent Angel Investor Conference Speaker
Signs of Improvement HK Gov HKBAN Micro Seed Angel VCFunding Funding Funding Funding
HK Based Startup Micro Seed Angel VC Funding Funding Funding FundingSeries A Series B Series C Series D Roughly within 18 months US$ in range of US$10 Millions or more Mobile First
Pure Metal Cards• British Hong Kong Based Startup founded by Richard Buckley in 2011. From idea to launch is 8 month.• Custom business cards made exclusively out of metal from stainless steel to 22 kt gold.• 2 weeks before arrival in HK to search for company names. A few signatures on arrival with accountant and actuary. 15 min meeting with HSBC to open bank account.• Thailand requires foreigners to hire 2-4 locals for every foreigner to hire. It’s high overhead for startup.
US Hong Kong HIGH TAX LOW TAX• One time corporate tax • Personal Income break 35% Tax 2% - 17%• Corporate tax & • Corporation income tax are 16.5% higher than most countries • Unincorporated 15%
Virtual Ofﬁce Silicon Valley• Business address • US$100• Access to meeting rooms Hong Kong• Internet access • HK$400 (US $51)
Service Apartment Hong Kong• Month to month • Lowest HK $6,000 (US• No contract $769)• No maid service • Average HK• Living space more $12,000 (US personal than hotel $1,538)• Most are located in popular districts near public transportation
Transportation Hong Kong• Taxi • Travel every part of HK• Mini Bus within an hr• Tram • District to district is• MTR within• Train walking distance • Travel within Asia within 6 hrs ﬂight
Hotel Hong Kong • Average HK• Higher than SF $1,560 (US $200) Rent• Same cost as SF & NYC
Living Expense Hong Kong• Breakfast • Cafe lunch HK $10-20 (US• Lunch $1.3-$2.6)• Dinner • Restaurant lunch HK• No Health Insurance $60-80 (US $7.7-10.3)• No Copay• Doctor Visit HK • Hotel Buffet lunch HK $200-300 (US$25-$38) $120 (US$15) including drugs
Hong Kong BusinessAngel Network (HKBAN) Hong Kong Top 4 Universities Incubation Funding • Hong Kong University of Science & Technology (HKUST) • Chinese University (CU) • Hong Kong Polytech University (HKPU) • Hong Kong University (HKU)
Talents Hong Kong • HK University• Most live with parents Graduate HK $6,000 (US• Or married with two $770) - $10,000 (US$1,282) incomes • Experience• Do Not work for equity Engineer HK $13,000 (US• Indian Engineering US $1,700) - $3K (No exp) - $5K (0-1 $20,000 (US yr) $8K (Exp) $2,600)
Archimedes Labs• Seed-stage startup incubator• Founded by Keith Teare & Kambiz Hooshmand as Founding Managing Partners• Focus on Consumer, Social & Mobile• Accept pitch from startup teams looking for angel investor
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.