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Foodtech, fintech emerge as bright spots in Hong Kong’s startup landscape

The city is home to over 600 fintech startups and more than 100 food tech firms.

If there’s one standout factor for the surge in food technology startups, credit the Hong Kong government. Its drive to increase agricultural output through modern and eco-friendly production methods has been relentless.

In 2023, InvestHK reported that the foodtech sector experienced a “substantial year-on-year increase” — an understatement for Hong Kong Trade Development Council (HKTDC) Deputy Director of Research Louis Chan.

“The foodtech sector has seen the largest or the most significant increase in terms of the number of startups in 2023… in terms of the absolute number,” Chan told Hong Kong Business. “When I say food technology, it also encompasses agriculture technology.”

Having paid close attention to more and more of these startups, the official traces the trend directly to the government’s all-out support to “increase the local so-called dependency ratio of our local supplier of crops or food.”

In December, Hong Kong launched its Blueprint for the Sustainable Development of Agriculture and Fisheries. This endeavour aims to increase the city’s “annual production of vegetables significantly by four folds from about 15,000 tonnes at present to about 60,000 tonnes within 15 years,” amongst others.

According to Chan, the focus of foodtech startups in Hong Kong ranges from farm-to-table technology to genetic engineering of seeds or soil, soil improvement to plant-based meats and various artificial intelligence (AI)-powered farming or fishing.

“Some of them invest in technology like microalgae to improve the protein content of their product or to enhance their protein content. We have also seen companies doing plant-based meat and not necessarily the meat itself, but also some plant-based pork fats, which can be used as ingredients for dimsum, or for dumplings, or for other cooking uses,” Chan said.

“We [have] also seen companies that are doing plant-based milk, they use soy milk by adding other ingredients such as nuts or sustainable nuts to enhance the nutritional content of the products,” he added.

FinTech remains king

Apart from food tech, fintech remains a bright spot for Hong Kong’s startup economy. InvestHK reported that fintech is still the most sought after sector in the city, with 601 startups in the industry.

Chan said fintech is also one of the “most thriving sectors when it comes to startups and early-stage business ventures in Hong Kong.”

“If you’re talking about Hong Kong, we cannot turn our heads away from the financial sector. We will continue to see good promises in financial technology [or] in the fintech sector,” Chan said.

Chan said fintech will also continue to be an “interesting area” for venture capital firms and investors, who have become “more prudent or more conservative.”

Talking on the types of products that will likely emerge from fintech startups, Chan said he is seeing improvement in technologies related to payments and crypto currency.

“We are expecting what we call bitcoin startups to come to the fort,” Chan said.

Chan underscored that Hong Kong has a “very good” fintech infrastructure, covering even blockchain and Web 3.0.

“We have a good number of virtual banks, virtual insurance, and a virtual asset-trading platform. Going forward, we see that with all those infrastructures ready, then we are expecting to see more international data companies coming over to grow their business riding on the ready infrastructure, especially when we are expecting more supportive industry policy from the government and also from the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC) and the Insurance Authority,” Chan explained.

“They are putting forward a more supportive ecosystem or framework for stakeholders to work on their innovative projects without any concern from the regulators or from the current regulatory framework, so to speak,” he added.

Foreign founders

Fintech is also a good sector for foreign founders, said Neha Singh, CEO and Co-founder of the market intelligence platform Tracxn.

Data from InvestHK showed that 26% of the startup founders in the city are non-locals, with Mainland (21.6%) having the largest share, followed by the United Kingdom (16.6%), United States (12.0%), France (10.1%), and Australia (7.6%).

“Hong Kong [has] a lot of good talent [that] goes in the FinTech, in the financial services space, because that being a hub for financial services as well as the tech in the [APAC] region,” Singh said. Hiring amongst Hong Kong startups rose 10% YoY in 2023, according to InvestHK.

Singh noted that electric vehicles (EV) would be a good area for foreign startup founders to explore.

Chan agreed, citing how new energy technologies present a strong opportunity since Hong Kong is promoting the adoption of EVs. In fact, the government supports facilities in the city that aid the growth of EV production, its research and development (R&D), marketing, and other related technology implementation related to it.

With the establishment of Microelectronics Research and Development Institute at Yuen Long InnoPark and the government’s new industrialisation funding scheme, Chan believes manufacturing will also be a bright spot for entrepreneurs seeking business in Hong Kong.

“We are expecting more manufacturing players to come over to use [our] platform and our infrastructure here in Hong Kong,” he said.

Other areas which Chan believes will receive interest from foreign founders are life sciences and health, AI, and data science. “We have Asia's largest and the world’s second-largest fundraising hub for biotech companies,” he stressed.

“For those  very new biotech companies, they can come over to the stock exchange here in Hong Kong, they can go public in Hong Kong under the so-called CHAPTER 18A, which is the listing regime  for biotech companies,” he added.

In addition, universities and research facilities are also very prominent in Hong Kong. “We have integrated a platform to attract those companies to come to Hong Kong and not to mention the government has set aside billions of dollars to promote the development of the life and health technology sector in Hong Kong by setting up, for example, the InnoLife Healthtech Hub,” Chan said.

Finally, he said Hong Kong has more or less 30 research laboratories that have started operations on AI and data science related businesses.

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