Where does startup capital come from?

Young people all have entrepreneurial dreams, but they have no innovative ideas and no entrepreneurial funds. In fact, with the rise of startup culture in recent years, both public and private institutions have increased their support for young people's entrepreneurship. However, what are the characteristics and limitations of the various entrepreneurial funds, government subsidies, and entrepreneurial loans on the market? Which one is best for you? Let me help you analyze them one by one.

Startup Capital Budget

If you want to start a business, it is not enough to have an idea. You must also plan your business development and budget for your business expenses. Let me test you first. Do you know how much it costs to register a company in Hong Kong? If the application is submitted in hard copy form, the company registration fee is HK$1,720. If the application is submitted in electronic form, it will cost HK$1,545. In addition, there are business registration certificate fees, etc., so if you want to start a business, it is best to make a budget first. . You can use the government's Startup Budget Analysis Meter, or refer to our other articles about startups.

Sources of entrepreneurial capital – entrepreneurial funds, government funding, entrepreneurial loans

Once you’ve completed your initial startup expense estimates, it’s time to look for sources of funding. In addition to the entrepreneur's savings, entrepreneurial capital can also come from private entrepreneurial funds, government funding programs, and even entrepreneurial loans. There are many types of these plans. Below we have selected seven of the more well-known methods. We hope that you who are interested in starting a business can compare the features of different plans from the perspectives of suitable industries, application requirements, and funding or loan amounts.

Innovation technology industry

Cyberport Creative Micro Fund

Cyberport is an entrepreneurial fund that aims to support the development of innovative and creative digital technology ideas in Hong Kong. In recent years, CCMF has supported many local start-ups, including GOGOVAN and Klook. As long as you have an idea, you can apply. There is no need to have an established company, but the condition is that your project is related to digital technology. The program accepts applications throughout the year, but is reviewed and approved three times a year. According to general circumstances, it takes approximately 3-4 months from the deadline to signing the agreement and launching the program.

Application requirements:
1/ Only those who are 18 years old or above and hold a Hong Kong permanent identity card can submit an application in the name of an individual, a team or a company
2/ Only accept applications for projects related to digital technology
3/ Projects that are not accessible will not be able to receive funding from other public organizations or programs at the same time.

Funding:
HK$100,000 seed fund (the funding is divided into three phases, and the applicant must implement and complete the product prototype within the six-month planning period)

Science Park Technology Entrepreneur Program

The government allocated HK$10 billion to the Hong Kong Science and Technology Parks Corporation last year to promote the development of innovation and technology in Hong Kong. The Science and Technology Park stated that in the first phase, more than HK$2 billion will be used to support the costs of start-up enterprises, including the addition of the new early-stage entrepreneurial program "STEP". Through this program, entrepreneurs can receive HK$100,000 in seed funding during the program period, use shared workspaces, and receive support from the Science and Technology Park in various aspects, such as designing business models and how to enhance the concept of innovative products.

Application requirements:
1/ A person who holds a Hong Kong ID card and is over 18 years old; or a company registered in Hong Kong for less than one year; or a team. Applicants for the team must register a company in Hong Kong before the program starts.
2/ Business has scientific research content

investment amount:
HK$100,000 seed capital

Alibaba Entrepreneurs Fund

Alibaba Entrepreneurs Fund is a non-profit project established by Alibaba Group to support young entrepreneurs in Hong Kong and Taiwan. The scale of the Hong Kong fund reaches HK$1 billion. This program is suitable for companies that not only have ideas, but also have established their own customer base or product prototypes. The industry is relatively diversified, and investments include financial technology companies, self-media, e-commerce platforms, mobile games, etc.

After the selection process such as interviews and due diligence, once the fund decides to invest in your company, in addition to receiving investment funds, the fund will also provide you with strategic guidance and expand your company through the Abarili ecosystem. scale to help you accelerate the development of other markets.

Application requirements:
1/ The main founder of the enterprise must be a Hong Kong permanent resident
2/ The main business operations must be in Hong Kong
3/ The company must have passed the ideation stage and established its own customer base/product prototype/products available for sale; or the company must have an innovative and unique business idea that is scalable, financially viable, and has sufficient potential for growth. It is better to have the potential to make use of the resources of the Alibaba ecosystem; or it is better for the company to bring innovation to its industry, or to have the potential to improve efficiency and user experience.

investment amount:
Investment terms (including investment amount) will be determined after negotiation between both parties

Applicable to many industries

youth development fund

The "Youth Development Fund" established by the Youth Development Committee under the government cooperates with NGOs in the form of fund matching to help young people start their own businesses. The first round of applications for this program has been approved earlier, and the entrepreneurial teams that received funding have diversified businesses, including cold brew tea and snack bars. In March 2019, the Youth Development Committee launched the "Guangdong-Hong Kong-Macao Greater Bay Area Innovation and Entrepreneurship Base Experience Funding Scheme" and the "Guangdong-Hong Kong-Macao Greater Bay Area Youth Entrepreneurship Funding Scheme" under the "Youth Development Fund", among which the "Guangdong-Hong Kong-Macao Greater Bay Area Youth Entrepreneurship Funding Scheme" "Youth Entrepreneurship Funding Scheme" is suitable for young people who are serious about starting a business and have a more comprehensive plan to apply, and provides seed capital for young start-up enterprises.

Application requirements:
1/ Hong Kong permanent identity card holders aged 18 to 40
2/ There are no restrictions on the businesses that can be engaged in (except for businesses that are illegal, involve tobacco, promote gambling, obscenity, etc.)
3/ Start-ups should register their business in Hong Kong and set up business in Hong Kong and/or mainland cities in the Greater Bay Area (such as local mass entrepreneurship and innovation bases)
4/ Young entrepreneurial teams can also have businesses in other regions at the same time
(The actual situation depends on the NGO business plan that is eligible for funding)

Funding:
Each entrepreneurial team can receive up to HK$450,000 government funding + HK$150,000 matching funds provided by NGOs = HK$600,000 (the actual situation depends on the NGO entrepreneurial plan that is eligible for funding)

Startup Loan Program

Hong Kong Youth Entrepreneurship Program

The entrepreneurial capital of this program is supported by the Ng Teng Fong Charitable Foundation. Successful applicants can receive an interest-free installment loan of up to HK$150,000 as the principal for starting their business. There will also be entrepreneurial mentors such as entrepreneurs and senior executives of industrial and commercial organizations to provide Guidance and professional consultation are provided to successful applicants. This plan is relatively flexible and has no special requirements for the industry, nor does it require the company to have developed to a certain level. However, those who intend to apply need to provide a credit report issued by TransUnion at their own expense.

Application requirements:
1/ Hong Kong permanent identity card holders aged 18 to 35
2/ Have an actual business idea to start business within one year, or a complete business plan and operation report that has been open for no more than three years; have the determination to start and operate a personal business and the funds to start the business
3/ The operating company must be registered in Hong Kong, and the main business must be conducted in Hong Kong

loan amount:
The maximum interest-free loan is HK$150,000. Monthly installments usually start from the seventh month after the loan is issued. The repayment period is generally not more than 24 months.

small loan program

The "Small Loan Scheme" is jointly launched by the Mortgage Corporation, banks and non-governmental organizations. There are three types of schemes, one of which is "Small Business Loan". The program does not involve government guarantees and is similar to general private loans, but in addition to the loan, applicants may be required to undergo entrepreneurial business training courses, and the course fees will be paid by the applicants. In addition, the loan terms of this business loan program are relatively limited, and those who intend to apply need to provide a credit report issued by TransUnion at their own expense. After preliminary evaluation, it will take approximately 2 to 3 months.

Application requirements:
1/ Those who are 18 years old or above and hold a valid Hong Kong identity card or "Pass to Hong Kong and Macau" (commonly known as one-way permit)
2/ Not subject to any bankruptcy order or bankruptcy proceedings at the time of application
3/ The relevant business is operated in the form of sole proprietorship, partnership or limited company established in Hong Kong
4/ Applicable to businesses that have not been launched or have been launched for less than 5 years (based on the records of the Business Registration Office)

loan amount:
Maximum HK$300,000 (the maximum loan term is 5 years, and the annual interest rate is not higher than 9%. If there is a qualified third-party guarantee, the annual interest rate is not higher than 8%)

General personal loans

In addition to the entrepreneurial funds, government subsidies, and entrepreneurial loans introduced above, you can also consider borrowing private loans to raise entrepreneurial funds. Of course, this method does not have funds or government subsidies, nor does it have entrepreneurial support, or it is low-cost like interest-free, but it is more flexible. In addition to the higher startup amount raised, more importantly, the funds are obtained faster, so that your entrepreneurial idea can be implemented as soon as possible without worrying about being slow and missing the opportunity to start a business.

Application requirements:
Be 18 years or older (the actual situation depends on different banks or financial companies)

loan amount:
The maximum repayment period is HK$3 million, with a maximum repayment period of 7 years, and the annual interest rate is as low as 2%. The actual situation depends on the plans of different banks or financial companies and the borrower's records.

The above is just the first step in starting a business. Sustainable development is the key to success. You may also want more funding or support later, such as government-funded SME marketing funds or Technology Voucher Scheme, to help your business take it to the next level. Keep up the good work!