HK and Singapore: the ‘Evil Twin’ Startup Ecosystems of SE Asia
Singapore and Hong Kong are Southeast Asia’s famous city-states. Both are offshore financial centres for the rest of Asia (and beyond), with a strong Chinese culture, and rightly proud of their success in spite of a lack of resources and space. Today, both places claim the coveted title of startup capital of the region, even though their tech ecosystems are quite different. Here’s an overview of each of them:
To be perfectly transparent, my first intention was to go to Shenzhen to visit this reputed maker scene in Asia. I had landed in Hong Kong a day before as I love the vibe of this city — often nicknamed “Asia’s New York” for its hustle and bustle, energy, and liberal way of thinking and doing business.
Unfortunately, lack of clear information and my own candor got me rejected at the Chinese border when I tried to enter Shenzhen.
I had four days left before my flight back to Singapore, so, well, why not dig into the local startup scene and eat dim sums, the local delight?
I had not heard so much about Hong Kong as a tech hub. I’m living and working in Singapore, a city which has poured a lot of efforts in to building a strong ecosystem.
Success stories gives an idea of a tech ecosystem’s maturation
Recent success stories confirm a good trend, such as video sharing startup Viki’s acquisition by Japanese ecommerce giant Rakuten for US$200-million. Recently, Candy Crush maker King bought a Singapore based game studio for US$84-million.
Comparatively, Hong Kong’s biggest fundraising would be Divide’s cumulated US$25-million (with an acquisition by Google at a rumoured US$150-million) and 8 Securities US$8-million dollars series A back in 2012.
A lot of events and spaces for the community make Singapore a credible and vivid scene. You can take a look at TheList.sg, a website which wraps-up the free events for startupers each week, and understand that each day brings three to four really interesting events, when you are more on a one to two events per day in Hong Kong as stated in StartupsHK.
Hong Kong shares a lot with Singapore, as a offshore financial hub for Asia, a city which attracts talent and serves as a platform for surrounding countries, and with a mix of English-speaking and Chinese-speaking population.
The role of government in Singapore and Hong Kong is quite different
The big difference when it comes to the startup scene is probably the way it is run. Singapore, often nicknamed “Singapore Inc” for the tendency of its government to manage it like a company, is definitely a state-powered, if not directly run, ecosystem.
For instance, the National Research Foundation has just launched another “matching investment scheme” of US$120-million, in partnership with five local investors. It means any of them putting one dollar in a company will see the NRF match another one dollar to support the risk-taking.
Grants such as the Production and Innovation Credit, the Innovation & Capability Voucher, or the Capability Development Grants, are other powerful incentives for companies to innovate. Add sponsored office space and one of Asia’s best university nearby with the National University of Singapore (NUS), and you get a pretty comprehensive and supportive ecosystem for entrepreneurs.
In Hong Kong, on the other hand, the government has been absent until very recently. The scene there is completely community-driven, with a longer maturation through events, coworking spaces, and, only since 2013, the involvement of the local government with StartmeupHK, an initiative of InvestHK, the government agency promoting Hong Kong as a business destination.
Coworking in Singapore or Hong Kong: subsidies help to launch an embryo of startup scene
The level of support of government, even though startupers often say it’s always too high, has an impact on the formation of the startup scene. For instance, most coworking spaces in Singapore are subsidized by the government. The National Youth Council, a government agency, hosts the Hub, one of the largest with more than 500 members, in the downtown area. The famous Blk71, a residential unit converted into a startup space, is managed by JTC, a government agency in charge of industrial space development. Rents there are 50 to 70% lower than market prices.
In Hong Kong, the first coworking space opened in 2007, and since then, a handful have popped up, but they need from day one to be profitable, meaning they can not count on a government net the day would-be entrepreneurs decide to rent another type of space.
Dim Sum Labs, Hong Kong’s hackerspace and a possible coworking space, is a tiny flat on a 14th on daytime, no more than 10 could efficiently work in such a small space. floor with barely enough room for a meetup of 20-25 pax, and,
I’ve met with Casey Lau, Jonathan Buford and Prof. William Liang, agreeingly the three “godfathers” of the Hong Kong tech scene.
All stressed that an activist government like in Singapore would be impossible in a city where it’s keeping a minimal role in the economy. They also think they could be lagging by three to five years behind Singapore in terms of ecosystem development.
I was lucky enough to attend a meetup at Dim Sum Labs. A lot of experiments on the community building is happening too, for instance, Casey Lau runs a quarterly “Introduction to the HK startup scene” to assess the profiles of newcomers and grow, step, by step, the local community, now strong of some 5000 members.
Fintech in Hong Kong, ecommerce in Singapore: when tech hubs specialise
There are way more events in Singapore, and you don’t feel there’s just one startup family, but several ones, like the tech community around Blk71, the social entrepreneurs near the Hub, the Makers who are scattered around several big events rather than a unique place.
Startup-wise, the two cities are quite different. With a strong culture in manufacturing and finance, Hong Kong found a niche which could expand to similar markets. Welend, for instance, is a peer to peer lending network where more than US$300-million exchanged between five thousand members over the last two years. 8 Securities is another typical Hong Kong hit, as an app mixing trading and forex information with social media data and features for its 50 000 users.
These successes are really anchored in the local characteristics of a city known for its packed and pricy real estate market as well as its culture for finance.
In Singapore, on the other hand, startups are probably more diverse and less linked to a purely local context. Property Guru, a real estate search engine with more than 20 million pageviews per month, andRedMart, an online grocery and delivery store with more than US$10-million funding so far, are filling a place not (yet?) taken by Western giants with similar goals. Ecommerce is clearly a hot trend in all Southeast Asia, and Singapore a clear winner when it comes to where ventures are launched.
Singapore and Hong Kong as hubs for regional expansion
A last way to compare Singapore and Hong Kong are their respective capability to project their startups abroad, overseas, in neighboring countries. If Hong Kong is definitely more Chinese-oriented, with 95% of Chinese race population (versus 70% of Singapore residents), it is not an easy path to China.
The cultural gap between the former British colony and “mainland China” is still strong, suspicion is high between the two neighbors, and even though a startup born in Hong Kong were to conquer the Chinese market, it would face an amazing number of difficulties, be it only for the difference of regulation on digital activities (you don’t need a licence to open an ecommerce in Hong Kong, but you need one in China for instance). In a way, Hong Kong is a bigger island, but it seems more “sealocked” with a too big China on the North, and a too different set of countries further South or East.
Singapore, on the other hand, benefits from an amazing strategic position right in the center of a 600 billion population area, with fast-growing middle-classes. Of course, it’s incredibly hard and different to open an e-store in Indonesia or Thailand than in Jakarta… but theses scenes seem also more interconnected, with events such as Echelon and its 10 satellites every year in all the countries of Southeast Asia.
In any case, both cities are among the most exciting that can be in Asia, especially for non-Chinese speakers as they are open to foreign talent, moving fast, although with a completely different culture. Well, at least, you can now add two amazing destinations to your next holiday’s wish-list.
This article originally appeared in VentureBurn.