Stanford EE402T 2012: Hong Kong Startup & Funding Between Hong Kong and US

1. Stanford University
US-Asia Technology Management Center
School of Engineering
EE402T Entrepreneurship in Asian High Tech Industries
Hong Kong Startup and Investment Funding
Between Hong Kong and US
Part 1 香
Bess Ho
Founding Partner of Archimedes Labs
Spring 2012 @Stanford 港

2. Hong Kong

3. Hong 香 = Fragrant
Kong 港 = Harbor

4. Official Language
• English
• British English (Written)
• Hong Kong English (Verbal)
• Chinese -
• Traditional Chinese (Written)
• Cantonese (Verbal)
Hong Kong

5. Language
• Hong Kong English 港式英語
• British English
• American English
Hong = Fragrant
Kong = Harbor

6. • 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

7. Nick Name
Pearl of the Orient (東方之珠)

8. Hong Kong
China

9. China
Hong Kong

10. Hong Kong
香港

11. Hong Kong
• China
• Macau
香港
• Hong Kong
• Taiwan
• Philippines
• Malaysia
• Brunei
• Indonesia
• Singapore
• Vietnam

12. Hong Kong
香港
South China Sea
• One-third of the world’s shipping
transiting through its water
• Hold huge oil and gas reserves
beneath its seabed.

13. China
中國
Hong Kong
香港
South China Sea
南中國海

14. Hong Kong
香港

15. Hong Kong 香港
• The New Territories (9 Districts)
• Kowloon (5 Districts)
• Hong Kong Island (4 Districts)

16. Hong Kong Macau
香港 澳門
• Hong Kong & Macau are two Special
Administrative Regions (SARs) of
People’s Republic of China (PRC)
中華人民共和國香港特別行政區
中華人民共和國澳門特別行政區

17. Macau Hong Kong
香港

18. Macau
澳門
Population: 435,235

19. Hong Kong
香港
Population: 7,061,200

20. 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

21. Hong Kong SF Bay Area
China including Silicon Valley
• Land: 426 sq. mi • Land: 3,524 sq. mi
• Population: 7 Million • Population: 7 Million

22. • 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

23. • 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

24. British Hong Kong
Before 1997

25. Most Admirable Founder
• Richest man in
Asia (Bill Gates
in Asia)
• 9th richest
man in the
world (US$25
Billions)
• Assets in15% of
Ka-shing Li HKSE
李嘉誠

26. His Family
• His Son
Richard Li is
Stanford Drop
out studying
Richard Li Computer
李澤楷 Engineering

27. Founder Celebrity
• Martial Artist
• Follow Bruce Lee
• Action-Film Star
in Asia
• Hollywood Movie
Star
Jackie Chan
• Series
成龍 Entrepreneur

28. Old Hong Kong
After 1997

29. 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.

30. 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.

31. • Alibaba.com • Google.com
$1.7 Billion IPO $1.67 Billion IPO
in Hong Kong on NASDAQ in
Stock Exchange 2004
(HKSE) in 2007

32. 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.

33. 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

34. 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

35. • 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.

36. New Hong Kong
Post PC Era 2008-Present

37. According to Business Week's
report in 2011, HK topped the
World Economic Forum's 2011
index of financial market
development, supplanting U.S. and
U.K. from the highest rankings for
the first time. HK jumped from
fourth making it the first Asian
financial center to lead the 60-
country index, helped by IPOs and
insurance.

38. Startup Funding Process
Micro Seed Angel VC
Funding Funding Funding Funding
Merger / Acquisition Initial Public Offering
(M&A) (IPO)

39. Successful Startup
Micro Seed Angel VC
Funding Funding Funding Funding
Merger / Acquisition Initial Public Offering
(M&A) (IPO)

40. Successful HK Startup
• No.1 in Asia
Smart Card
supplier
• Top 3 in PC-
linked smart
card reader

41. Advance Card Systems (ACS)
• Found in 1995
• Incubated at
HK Science &
Technology
Park
• IPO in HKSE
• SEHK:8210
Danny Wong
CEO & Founder

42. Advance Card Systems (ACS)
• Winner of
Product Quality
Leadership
Award
• Forbes Asia’s
“Best Under a
Billion” - Sales
between US
$5M-1Billion

43. 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

44. Hong Kong
Startup Story

45. Hong Kong
Startup Story

46. Research Tour

48. Pearson
Hong Kong

49. GSMA
Groupe Speciale Mobile (GSM)

50. 1
GSMA Mobile Asia Congress
App Bytes’s MAC App Planet
Sponsored by WIP Connector
Hong Kong Convention and Exhibition Centre

54. • The Muther! of
all Hackathons
at Computer
History
Thibaut Rouffineau Museum
VP Developer Partnerships attracted over
WIP Connector
500 mobile
Moderator
developers

55. • Facebook
announce to
open a Sales
office in Hong
Kong in Feb
2011
• It’s Facebook
David Lim 2nd office in
Mobile Partner Engineer Asia. 1st office
Developer Relations & Asia HQ is in
Facebook
Singapore.
Panelist

56. • Airpush is first
mobile ad
network based
on push-
notification
• Android based
only
Inman Breaux
VP of Publisher Relations
Airpus
Panelist / Sponsor

57. Mobile Monday Hong Kong
MoMo HK

58. WTIA HKWDC
Hong Kong Wireless Technology Hong Kong Wireless
Industry Association Development Centre

59. 1

60. Hong Kong Roles
0 1
Book Author Speaker

61. 2

62. Hong Kong Roles
0 1 2
Book Author Speaker Judge

63. Where to build
Hong Kong Startup Dream

64. 3
1st Official Hong Kong
Startup Weekend

67. HK Startup Hero

68. Fri Sat Sun
• Pitch Idea • Hack • Hack
• Form Team • Hack • Present
• Hack • Judge

69. Day 1

71. Fri Sat Sun
• Pitch Idea • Hack • Hack
• Form Team • Hack • Present
• Hack • Judge

86. 1st Prize Winner
AwesomeShip

87. 3 NO. 1 Engineering HKUST
NO. 1 Design HK PolyTech University

88. Hong Kong Roles
0 1 2 3
Book Author Speaker Judge Lecturer

89. Winning is only
the beginning

90. 1st Global Startup Battle
48 Winning Teams from each Country

91. Within 2 Weeks

96. After Newspaper Reporter
winning

97. After Media Interview
winning

98. 1st Global Startup Battle
Grand Prize Winner

106. Winning is only
the beginning

107. Global Startup Battle Prize
Demo Asia @Singapore

108. Hong Kong Roles
Within a month of Promotion
0 1 2 3 4
Book Author Speaker Judge Lecturer Adviser

110. Minimal Viable Product (MVP)
Within 3 Months

111. Hong Kong Startup Weakness
Insufficient
Pitch / Stage Demo

120. Global Startup Battle Prize
Launch Conference @SF

122. Teddy Chan
CEO / Hacker

123. Andrew Chan
Product Marketing

124. Dante Tsang
CTO / Hacker

125. HK Startup Story Video

126. HK Startup Story Video

127. AwesomeShip Pitch
http://youtu.be/6uKLh_7hKgs

128. AfterShip Product
http://www.youtube.com/watch?v=Xq8cbCCoC3M

129. Nov 2011 1st Qtr Feb 2012
3 Month Baby
AwesomeShip AfterShip
Code Name Official Launch

130. http://itunes.apple.com/app/aftership/
id507014023?ign-mpt=uo%3D6&mt=8

131. Hong Kong Roles
Within a month of Promotion
0 1 2 3 4
Book Author Speaker Judge Lecturer Adviser

132. Winning is only
the beginning

133. Hong Kong
Startup Events

136. • Organizer of
Startup
Monday
• Organizer of
Startup Hong
Kong
• Organizer of
HK Startup
Weekend
Jonathan Buford
• Founder of Boot
HK
Co-Founder of Makiable

137. • Organizer of
HK Startup
College
Jonathan Buford
Startup Founder

138. • Organizer of
HK Startup
Weekend
• Organizer of
Japan Startup
Weekend
• Former MSFT
MSN & Yahoo!
Nicholas Wang
Co-Founder of Makible

139. • Organizer of
Startup
Leadership
Program
Miranda Gao
HKUST Business Student

140. HK Founder Institute
• SLP is
nonprofit
founded by VCs
in Boston
• Biweekly
Session on Sat
2-5pm
• Focus on
Startup
Startup Leadership Program (SLP) Leadership
Skill

141. • Instructor
• School of Design
at Hong Kong
Polytechnic
University
Gino Yu
Multimedia & Entertainment
Technology
HK Polytech University

142. Hong Kong
Biggest Developer Event

143. • Founded in
2007 at Yahoo!
HK
• Biggest
Developer
Event -
Unconference
• Regard as Best
Barcamp in
Asia
Ben Crox • Attract 500
Organizer of HK Barcamp Developers

145. Hong Kong
Hacker Space

146. HK HackerDojo
• Hackers /
Makers
• Co-working
Space
• Startup Event
• Startup
Accelerator
Program

147. Boot HK Silicon Valley
• US$100
Membership
• US$500 Table
Space
Boot HK
• ~HK$500 (US
$64)
Membership
• ~HK$2,000
(US$256)
Table Space

148. Boot HK
Boot HK
19 Floor Hang Wai Commercial Building
231-233 Queen’s Road East
Wan Chai, Hong Kong

149. Hong Kong
Incubators

150. Role of Hong Kong Government
in funding Startup

151. HK Stanford StartX
• Co-working
Space
• Startup Event
• Startup
Incubator

152. M-Lab
• School of
Design at Hong
Kong
Polytechnic
M-Lab University
Unit 601 & 604 6/F
InnoCentre
72 Tat Chee Ave
• Applied
Kowloon Tong, Hong Kong Research
• Digital
Entertainment
Laboratory

153. Cyberport
• Cyberport
Creative
Micro Fund
• HK$100,000
grants for 5
winning
startup
• Each HK
$20,000 (US
$2,564)

154. Cyberport Creative Micro Fund

155. HK Science & Technology Park
• Co-working
Space
• Startup Event
• Startup
Accelerator
Program

158. Attracting Startup Founders
Doing Business in HK

159. Attracting Startup Founders
Doing Business in HK
• Raised $9M Round
• Foundry Group
David Merrill • True Ventures
Co-Founder of Siftable

160. Attracting Startup Founders
Doing Business in HK
• Funded by
Archimedes Labs
Idan Beck
Founder of Incident Tech • Guitar Hero for
Guitar Player

161. HK Startup Challenges
Micro Seed Angel VC
Funding Funding Funding Funding
Merger / Acquisition Initial Public Offering
(M&A) (IPO)

162. Signs of Improvement
HK Gov
Micro Seed Angel VC
Funding Funding Funding Funding

163. • 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

164. Hungry Games
Micro Seed Angel VC
Funding Funding Funding Funding

165. Hong Kong Business
Angel Network (HKBAN)
• HK
Government
supported
effort to
organize angel
investors in
investing in
HK Startup

166. Signs of Improvement
HK Gov HKBAN
Micro Seed Angel VC
Funding Funding Funding Funding

168. Hong Kong Business
Angel Network (HKBAN)
Hong Kong
Incubators
• Cyberport
• HK Science &
Technology
Partk

169. Hong Kong Business
Angel Network (HKBAN)
Hong Kong
Top 4
Universities
• HKUST
• CU
• HKPU
• HKU

170. China
Hong Kong
香港
Euro US$
Malaysia Singapore

171. Wonder why those US tech companies put Singapore
first, HK second? Heard there are more IT talents
there. True or not?
Google, Linkedin put Singapore as SE Asia’s
headquarter
Facebook open Singapore office first then Hong Kong

177. 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

178. Signs of Improvement
HK Gov HKBAN
Micro Seed Angel VC
Funding Funding Funding Funding

179. HK Based Startup
Micro Seed Angel VC
Funding Funding Funding Funding
Series A Series B Series C Series D
Roughly within 18 months
US$ in range of US$10 Millions or more
Mobile First

191. 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.

192. 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%

193. Virtual Office Silicon Valley
• Business address • US$100
• Access to meeting rooms Hong Kong
• Internet access • HK$400 (US
$51)

194. 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

195. 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

196. Hotel Hong Kong
• Average HK
• Higher than SF $1,560 (US
$200)
Rent
• Same cost as SF & NYC

197. 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

198. Hong Kong Business
Angel 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)

199. 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)

200. Biggest Investors
Micro Seed Angel VC
Funding Funding Funding Funding

203. Hong Kong Startup
Next Step?

204. This is my HK Dream
0 1 2 3 4
Book Author Speaker Judge Lecturer Adviser

205. What’s your Dream?

206. Startup Adviser @Bess
Bess@archimed
eslabs.com
http://
www.slideshar
e.net/bess.ho
Mobile Architect
Instructor
Startup Adviser
Angel Investor

207. 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