Hong Kong has perhaps one of the most heterogeneous and
interesting mix of startups in the world in terms of founder
makeup, location of operational base and target markets. Founders
of a Hong Kong startup, for example, could be made up of
individuals from a wide variety of personal backgrounds, including
locals, returnees mostly from North America, foreign expats, and
PRC residents and returnees, especially those hailing from the
Pearl River Delta. While a "Hong Kong startup" may be
taken to mean the use of a Hong Kong incorporated operating or
holding company, depending on the background or special strength of
its founders, its actual seat of management or key operational base
could be in Hong Kong, in China, or sometimes even the U.S. The
initial targeted market of startups could also vary widely from the
local market, to China, Southeast Asian region or other overseas
Startups tend to concentrate in business areas offering the
greatest potential for business growth, from those relating to TMT
(technologies, media and telecom) on the one hand to those
targeting the huge China market, in particular the consumer market,
on the other or areas where the two overlaps. Specific industry
areas of the startups are extremely wide ranging, from retail
business to language instruction, cartoon production, fast food,
semiconductor, E-commerce, outdoor media, health supplements, and
on and on.
Accordingly, business angels in Hong Kong have an abundance of
choices in investment targets.
The quintessential angel financing model probably did not emerge
in Hong Kong until the 1990s. Before that time, entrepreneurs
seeking early-stage funding were largely left to chance or the luck
of knowing the "right" people or groups to approach.
Knowledge of angel investing practices was largely lacking.
Occasionally, founders of a startup might obtain loan or equity
money from an unrelated party or a distant relative. However, the
lack of a standardized or well-conceived practice for structuring
the loan or investment often resulted in poorly fitted
documentation leaving room for later disputes or unfairly skewed
arrangements leaving sour taste among the parties.
As the Silicon Valley tech success rippled across the Pacific in
the 1980s, its effects, including the tech based startup and angel
financing approaches to building new businesses, began to be felt
in Hong Kong. I recall handling a case as a lawyer in Hong Kong in
the mid-90s where an Internet startup in Hong Kong received angel
funding in the range of several million US dollars. The financing
was syndicated by a well known investment banker to seven or eight
local individuals where each invested in several investment units
of US$100,000 per unit. The documentation for the investment
followed the preferred share model prevalent in California. In most
respects, that transaction was not much different from similar
deals structured in the US at the time.
Since the 1990s, the concept of angel investment has gradually
taken root and started to proliferate in the business circles,
especially among the startup and tech sectors, expatriates and
returnees, VC and capital markets practitioners, and a younger
generation of business executives and professionals.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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As per a 2015 survey by Nasscom (the National Association of Software and Service Companies) India has paved the way to secure the third position in the world with three to four startups emerging every day, primarily in the areas of e-commerce, consumer services and aggregators.
Joint Ventures are still a popular investment vehicle for many
foreign investors who do business in China. Sino-foreign joint
ventures can take the form of equity joint ventures or cooperative
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