ABOVE Swire Properties' Blueprint, which provides co-working space and houses start-ups taking part in its accelerator programme, occupies two floors in Cornwall House, Taikoo Place.

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A C C E L E R A T I N G H O N G K O N G With the proliferation of co-working spaces – many run by entrepreneurs – and both privately and publicly funded start-up accelerator programmes, Hong Kong is seeing a hi-tech reignition of the city’s entrepreneurial spirit. And now, large corporations are getting involved.

STORY TONY CHANPORTRAITS GARETH GAY

In October 2010, Jonathan Buford got up on stage at the first Startup Saturday event organised by StartUpsHK, a recently-formed tech start-up community, and pitched his idea for BootHK, a co-working space for start-ups. It was quite simple: Buford needed HK$100,000 for a two-month rental deposit on a modest 1,000- square-foot space for entrepreneurs in Wan Chai.

Among the audience were Theodore Ma and his father, Max, founder of the MaBelle Jewellery Company retail chain. “My dad and I decided, ‘You know what, this is a very compelling proposal,’” says Ma, who became managing director of MaBelle in 2009. “We walked right up to him [Buford] and gave him $50,000. Someone else gave him HK$50,000. In less than three minutes, he got his HK$100,000”.

Fast forward five years, and the number of co-working spaces in Hong Kong has increased more than tenfold – from just three in 2010 to 34 in 2015, according to InvestHK. In addition, there are six incubators and accelerators, which also house start-ups. Co-working spaces have become the sharing economy’s solution to the city’s often prohibitively high office rentals.

Cocoon, which was co-founded by Ma and opened in June 2012, is one of these spaces. Before then, Ma enjoyed attending a lot of the start-up events that had sprang up in the city. Part of the reason he became involved in the scene, Ma says, was because he wanted to meet people who were savvy in social media (in its infancy back then), which was relevant to MaBelle’s newly-launched online business.

Initially earmarked for MaBelle’s jewellery headquarters, the Mas decided to turn a 14,000-square-foot office space in Tin Hau into a co-working space. It was named Cocoon, says Ma, because his father was inspired by the 1980s movie of the same name, which featured old people who became young again. “My dad thinks start-up ideas rejuvenate people and society,” he says.

Since January 2013, Cocoon has hosted 29 pitch nights and hundreds of other events. “We believe in entrepreneurs helping out each other,” says Ma. At Cocoon’s pitch nights, aspiring entrepreneurs get the undivided attention of 150 people interested in start-ups during their five-minute presentation followed by a five-minute Q&A. Ma advises teams: “Don’t just pitch for investors,

ABOVE Theodore Ma, co-founder of Cocoon and managing director of MaBelle Jewellery Company, at Cocoon. The 14,000-square-foot venue in Tin Hau includes co-working space and holds regular events.

RIGHT Simon Squibb, founder and CEO of Nest Investments and founder and chairman of Fluid, at Nest's Hong Kong office in Sheung Wan

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pitch for customers, team mates, suppliers and people to work with you.” Through Cocoon’s events and networks, start-ups have collectively raised more than HK$130 million, he says.

Together with several partners, Ma has recently invested in start-ups himself. One of them is Shopline, which won a Cocoon pitch night final in 2013. The company, which allows an e-commerce merchant to open an online store using a mobile phone within minutes, now has more than 35,000 merchants on its platform, and raised US$1.2 million in seed funding earlier this year.

I N C U B AT I N G S U C C E S SIn 2010 – the same year that BootHK was established – Simon Squibb put together a team for Nest Investments, a new incubator company he founded.

Squibb had built up Fluid, a creative agency, for a decade. Originally established because he felt there was a lack of companies in Hong Kong that could provide good branding, marketing and digital strategies at affordable prices, Fluid became a big success. Then Squibb decided he wanted to start something new.

After analysing what he liked doing the most, he reached a bit of

an epiphany. “I thought, ‘Why don’t I just dedicate myself to helping start-up founders, and why don’t I build a brand from scratch again? Because that’s what I really enjoy,’” Squibb says. While he still chairs Fluid, he found someone else to run it.

Nest is engaged in two main activities: the first is incubation; the second acceleration. Incubation occurs while a company develops its technology or product and can take years, while during acceleration, the focus is on acquiring customers and market development, explains Peter Dingle, the director of innovation accelerators at Nest. Nest, which

invests seed capital and time in promising start-ups through incubation, now has a portfolio of dozens of companies.

Nest started what Squibb calls “brand partnership accelerators” last year. Each three-month programme, which includes intensive education and networking-related events, involves a major corporation brought in by Nest. At the end of the programme, companies showcase their products to potential investors at a demo day.

In the inaugural AIA accelerator programme, where participating companies were given space and mentoring by Nest, seven out of the eight health tech companies that participated got funded after demo day earlier this year. Ten start-ups have been participating in the DBS accelerator programme, which focused on financial technology (FinTech) start-ups, while eight are taking part in a programme with Nissan’s Infiniti, which is focused on smart cities and Internet of Things (IoT) innovation.

Nest provides mentoring, know-how and relationships, while the large corporates and banks involved bring, among other things, access to large pools of potential customers. Unlike most US-based programmes, the Nest accelerator programmes do not involve pre-agreed equity investments in participating start-ups. “It’s an evolution of the US model,” says Squibb, who explains that instead, there is the opportunity to talk about potential investments and partnerships at the end of the programmes.

Squibb has seen Hong Kong’s tech start-up scene change enormously since he first started Nest. “Five years ago, everyone said to me, ‘This won’t work, mate. The market’s too small. Don’t bother investing in start-ups; go work for a bank, buy property’,” says Squibb. “Now, I think that people see it. They see [for example] Jack Ma buying a house on the Peak

“FIVE YEARS AGO, EVERYONE SAID TO ME, ‘THIS WON’T

WORK, MATE. THE MARKET’S TOO SMALL. DON’T BOTHER

INVESTING IN START-UPS; GO WORK FOR A BANK,

BUY PROPERTY'”— Simon Squibb, Nest Investments

“I THINK THAT A LOT OF PEOPLE IN THE [HONG KONG] BUSINESS WORLD AGREE THAT THE ENTREPRENEURIAL SPIRIT DIED IN THE PAST 20 YEARS. AND WE ALL NEED TO REIGNITE IT”

— Theodore Ma, Cocoon

OPPOSITE FROM TOP PaperclipHK, a 7,000-square-foot co-working space in Sheung Wan, runs regular events and an academy called Startup Campus; Deepak Madnani, founder and CEO of PaperclipHK

LEFT Cyberport’s Smart-Space has grown from 14 rooms in 2009 to around 76,000 square feet of co-working spaces in multiple venues.

BELOW Herman Lam, CEO of Cyberport Management Company

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recently.” When Nest first started its incubation programmes, they had about four applicants each time. Now, Squibb says, they get over 250 applications for each pitch day, which they narrow down to about 20. Nest usually ends up investing in one or two.

S TA RT- U P E D U C AT I O N , H O N G K O N G S T Y L E Co-workspaces in Hong Kong now provide a host of value-added services, such as events, classes, mentoring and potential investment (in addition to space, coffee, printing and other services). Some cater to specific niche areas, such as hardware, software or IoT.

For Deepak Madnani, founder and CEO of PaperclipHK, a co-working space in Sheung Wan which opened in March 2014, the learning process for start-ups is crucial. Madnani participated in a workshop run by Steve Blank, a well-known Silicon Valley entrepreneur

G O V E R N M E N T I TC A M B I T I O N S Meanwhile, the government has pushed initiatives to help kick start IT and other entrepreneurial activity in the city. Cyberport, a sprawling complex which includes office buildings, retail spaces and a hotel, was created with the intention of forming a leading information and communications (ITC) tech hub in the region. “We

want to encourage the development of the tech ecosystem in Hong Kong,” says Herman Lam, CEO of Cyberport Management Company (Cyberport), which is fully owned by the government.

Smart-Space was launched at Cyberport in 2009. After initially starting with just 14 rooms, it now encompasses some 76,000 square feet of co-working spaces over multiple venues, and currently

houses over 230 companies, says Lam. Prices start at HK$800 per month for a floating desk or from HK$4,000 for a room. Users are not vetted but need to be IT-related companies.

In December 2013, Cyberport announced it would invest at least HK$200 million to drive the development of IT within a three-year period. Lam says Cyberport does not receive government funding, but uses money from its operations, which have been cash positive since 2008.

The funds support start-ups through three main programmes: the Cyberport Incubation Programme, which began in 2006, the Cyberport Creative Micro Fund (CCMF), which was established in 2011, and the Cyberport Accelerator Support Programme, which was launched in 2013.

CCMF is a seed fund which provides HK$100,000 cash grants to help start-ups develop

recognised for developing the Lean Startup movement, a couple of years ago. Madnani says Blank helped him see his experiences as a “journey of validation”.

Madnani, who has over 15 years of experience running different businesses, encompassing trading, manufacturing, supply chain management, design and furniture, is himself a serial entrepreneur and still runs several businesses. But he is also passionate about sharing his experiences and coaching aspiring entrepreneurs. “I want to make a dent in the entrepreneur universe,” he says, adding he is keen on helping Asia come up with its own approach to start-ups and stressing that, “we’re not Silicon Valley”.

He explains: “In Hong Kong, everyone’s doing multiple businesses. In Asia, we don’t just do one thing. We diversify. There’s so many opportunities and the ease of doing business is such that we can’t help getting involved.”

Squibb has another interesting take on this point. “Our advantage here, in my view, is we’re five minutes behind Silicon Valley,” he says. He cites the example of Jack Ma, who, after seeing Paypal, Amazon and eBay in “silos” in the US, ended up building one massive company – Alibaba, whose eventual IPO was the world’s biggest – with the benefit of hindsight.

PaperclipHK runs an academy called Startup Campus, which hosts regular workshops. Signature events include “Real Entrepreneurs”, where entrepreneurs share their stories, and “Show Me the Money”, where investors talk about what they are looking for.

Ma’s Cocoon has been working with the Hong Kong University of Science and Technology and the Chinese University of Hong Kong on internships, bootcamps and career days. Since last year, he says they’ve placed more than 75 students into internships at start-ups.

“INSTEAD OF JUST ‘TECH’, WE NOW

TALK ABOUT FINTECH, EDUCATION TECH, LEGAL

TECH, FASHION TECH AND E-COMMERCE. AND THESE

PLAY TO HONG KONG’S STRENGTHS”

— Herman Lam, Cyberport Management Company

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BELOW Swire Properties' Blueprint occupies 10,000 square feet of co-working space and another 10,000 square feet which houses start-ups taking part in its accelerator programme in Cornwall House, Taikoo Place.

RIGHT Hilary Szymujko, head of Blueprint at Swire Properties

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prototypes during a six-month period. Participants in the two-year Cyberport Incubation programme receive an up to HK$330,000 cash grant, rent-free office space and other support and services, while the Cyberport Accelerator Support Programme provides up to HK$300,000 for recipients to meet the costs of participating in accelerator programmes (which can include fees, office rentals, travel and accommodation).

“By grooming and building companies for better products, solutions and better teams, I feel confident that they will be able to find money,” says Lam.

Lam says he has seen a dramatic increase in tech entrepreneurship in the city since 2011. “I think it has had a lot to do with the popularity of mobile, cloud computing,” he says. “Because of these technology developments, it is suddenly possible for a small company to reach large

The 16th floor of Cornwall House is now a co-working space that is open to anyone working in technology. With space costing just HK$2,000 per month, it is full to capacity, with over 140 members, and there’s a waiting list. The floor above houses start-ups in Blueprint’s six-month accelerator programme, which supports B2B (business-to-business) start-ups. There are 10 companies in the current group. Applicants are vigorously vetted and face an interview panel which includes high-level Swire executives. Blueprint received about 150 applications for the current cohort.

With competition for accelerator programmes heating up, US-based accelerator Techstars teamed up with Nest and other partners to run Start Up Next Hong Kong – a pre-acceleration programme designed to help start-ups get into top accelerators – at Blueprint in November.

As in the case of Nest, the Blueprint accelerator programme does not involve acquiring equity in participating start-ups. But it has provided other benefits so far. For example, one programme graduate, SnagR, which Szymujko says has “a clear synergy” with Swire Properties, has completed several pilots with the company. SnagR has developed technology which assists in property site inspections, so that when pictures are taken, they can be tagged to floor plans, making a traditionally paper-heavy process digital.

What can all this mean for Hong Kong in the long run?

For the Ma family, it's a topic close to their hearts. “My father instilled the entrepreneurial spirit in me,” says Ma. “It’s important to us, because like with many other Hong Kong families, our ancestors came here with nothing. I think a lot of people in the business world agree that the entrepreneurial spirit died in the past 20 years. And we all need to reignite it.”

“More and more corporations are interested in innovation and also the new business models they can pick up,” says Ma.

Launched by Swire Properties in January this year, Blueprint, located in Taikoo Place, is described by the major property developer as being part co-working space, part accelerator. “The idea of Blueprint came about from an internal discussion within Swire about innovation and how Swire

Properties innovates,” says Hilary Szymujko, head of Blueprint. Management was interested in questions such as “How does innovation come about?” A digiital taskforce was formed.

And when two floors of about 20,000 square feet in Cornwall House became vacant, instead of finding a new tenant, they decided, “Let’s carve out a budget and actually bring innovation to Taikoo Place,” Szymujko says.

audiences and to be able to provide technologies and solutions with a very ‘lean and mean’ structure.”

He also sees more crossovers between technology and other domains. “Instead of just ‘tech’, we now talk about FinTech, education tech, legal tech, fashion tech and e-commerce,” says Lam. “And these play to Hong Kong’s strengths, because we have a lot of experts in all these different domains”. 

In 2006, only 25 companies applied to Cyberport’s incubation programme, out of which 12 were accepted. This year, Cyberport receive about 1,000 applications for its CCMF and incubation programmes, according to Karen Wu, Cyberport’s senior manager of corporate communications. Lam estimates that close to HK$500 million has been invested in the hundreds of companies that have gone through Cyberport’s programmes.

One well-known Cyberport success story is that of mobile logistics company GoGoVan, which joined its CCMF programme just over two years ago and subsequently took part in its incubation programme. In 2014, it received US$6.5 million in Series A funding in 2014 and a further US$10 million when RenRen acquired a 10 per cent stake. This year, it received at least US$10 million in a Series B funding.

E N T E R T H E C O R P O R AT E H E AV Y W E I G H T S Perhaps the biggest recent change in the local start-up scene has been the growing involvement of large corporates. Apart from partnering with AIA, DBS and Infiniti, Nest has brought in other partners (such Amazon and Microsoft for the DBS-branded accelerator programme).

Cocoon’s Ma counts Li & Fung, KPMG and Hong Kong Broadband Network among its partners.

“THE IDEA OF BLUEPRINT CAME ABOUT FROM AN INTERNAL DISCUSSION WITHIN

SWIRE ABOUT INNOVATION AND HOW SWIRE PROPERTIES INNOVATES”

— Hilary Szymujko, Swire Properties

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