Gov’t R&D push may drive startup growth in Hong Kong

Universities are at the forefront of the thrust to create new businesses.

Hong Kong is poised to witness a surge in startups emerging from university-based research and development leads, spurred by strong support from the government, according to venture capital analysts.

“What’s unique about Hong Kong is that its universities have not just their investment arm, but they also have support from the government,” Vincent So, founder of startup venture builder Inspect Element, told Hong Kong Business.

“The private sector can invest in university projects and have the adrgovernment subsidise these,” he said in a Zoom interview. So expects the government to continue working with local universities to turn academic achievements into actual business use cases.

One state initiative is the $10b Research, Academic and Industry Sectors One-plus (RAISe+), which offers funding to eight University Grants Committee-funded Hong Kong universities, said Floria Chan, senior vice president at Beyond Ventures.

Albert Wong, CEO at Hong Kong Science & Technology Parks Corporation (HKSTP), said many of the city’s exceptional research talents lack the business acumen to commercialise their innovations.

The agency, which seeks to transform Hong Kong into a regional hub for innovation and tech, has launched co-development, upskilling, training, market expansion, and collaborative exchanges between startups. 

These programs also aim to help Hong Kong startups “go global,” he said.

HKSTP will roll out the second edition of its Global Booster Programme in April, offering participating startups a six-month program on training, business development, and fundraising.

The project helps Hong Kong startups build a strong presence in North America and other global markets, whilst securing financial backing from investors and strategic partners, Wong said. 

Chan said startups likely to attract funding this year because of these programmes include those in artificial intelligence AI applications, hardcore tech, life sciences, and clean energy. 

 "The government typically supports startups in these sectors, and consequently, venture capital funds  are likely to follow suit," she said in an emailed reply to questions.

Wong cited a state measure that lets unprofitable biotech companies list on the Hong Kong stock exchange, giving them funding opportunities at various stages of development.

Adrian Lo, partner, Strategy3, at Ipsos in Hong Kong, expects more biotech, health, and life sciences startups in Hong Kong, targeting China and regional markets, given the support of HKTSP, Cyberport, and the Hong Kong-Shenzhen Innovation and Technology Park (HSITP).

Ron Levin, managing partner at Alumni Ventures, said life sciences will be the sector where AI would likely have the greatest impact.

“When AI and machine learning are combined with advancements in fields such as genetics and synthetic biology, we believe the pace of advancement in diagnostics and drug discovery will be truly unprecedented and result in saving countless lives,” he told Hong Kong Business in an email response.

Bioscience is among the top three sectors where Hong Kong excels, alongside supply chain and logistics and financial technology (fintech), according to Startup Genome.

Lo, citing StartupGenome data, said 45 new life sciences startups entered Hong Kong between H2 2023 and late H2 2024, bringing over HK$800m in investments and creating 3,000 jobs.

Fintech, greentech

InvestHK, the agency whose mission is to attract and retain foreign direct investment, said fintech continues to dominate Hong Kong’s startup ecosystem, with 619 ventures as of 2024.

Amit Chu, a partner at Verda Ventures, said more institutions have been adopting blockchain-based financial products in Hong Kong. 

Blockchain funding increased 17 times from 2020 to 2024, according to JF Gauthier, CEO at Startup Genome. “Blockchain and decentralised finance will pay off well for Hong Kong,” he said via Zoom.

Chu said decentralised financial infrastructure, AI-driven financial automation, and  embedded finance are fintech areas that are poised for rapid expansion.

“Lower barriers to entry, combined with the integration of AI and blockchain in financial services, will drive efficiency gains and unlock new business models, fueling strong investment activity,” Chu said in an emailed reply to questions.

He also expects growth in Web 3 and digital assets given Hong Kong's crypto-friendly regulatory framework and support from Cyberport, the city's digital technology flagship and entrepreneurship incubator.

“Hong Kong has doubled down on institutional crypto and Web3, supported by its virtual asset service provider licensing framework, which has attracted global players,” Chu said. “The Cyberport Venture Capital Forum, for example, was a great demonstration in bringing global stakeholders together.”

So noted that Hong Kong, unlike China, is in a unique position to become a strong financial center for cryptocurrencies. China has restricted the use of cryptocurrencies, cracking down on crypto trading and mining since 2021.

So said Hong Kong recently approved four cryptocurrency exchanges — Accumulus GBA Technology (Hongkong) Co., DFX Labs Company, Hong Kong Digital Asset EX, and Thousand Whales Technology (BVI).

 Lo said many in the industry see Hong Kong’s crypto policies as "a signal that the city could spearhead China-related Web3 innovation."

"This trajectory is expected to foster the continued emergence of a cluster of blockchain startups, particularly in areas such as compliant digital finance, institutional crypto products, trade finance, and real-asset tokenization. This, of course, will place Hong Kong in direct competition with Singapore to establish itself as the leading APAC crypto and blockchain innovation hub," Lo said.

Beyond being a crypto hub, Hong Kong is also focusing on becoming a global leader in green technology and finance.

HKSTP’s GreenTech Hub, which pushes innovation and growth in the green technology sector, brings together more than 200 greentech companies. The hub has 16 partners from business and finance, industry associations, and top local universities. 

Partner universities offer talent training, testing, and application scenarios for greentech solutions to fast-track R&D commercialisation, Wong said.

In 2024, green startups in Hong Kong increased 82% to 244 from a year earlier, according to InvestHK. Startups in health and medical technology rose 54% to 275, helping the city achieve a record 4,694 ventures. 

Wong expects the city's startup economy to keep booming.

Chu also expects funding to pick up for startups, especially those with “clear user demand, strong revenue pathways, and regulatory alignment.”

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