Entrepreneurs and corporate executives highlight the irreplaceable value of start-ups in Hong Kong amid the COVID-19 pandemic, agreeing that they are instrumental to developing new ideas, keeping society future-ready and creating job growth, according to the third annual study on Hong Kong’s entrepreneurial ecosystem by KPMG China and Alibaba Hong Kong Entrepreneurs Fund.

Building on two years of research, this year’s study features a survey of 134 Hong Kong-based entrepreneurs and executives at start-ups, 200 Hong Kong-based corporate executives and 866 Hong Kong-based university students; insights from in-depth interviews with start-up founders, corporate innovation leaders, academics and venture capital executives; and an analysis of venture capital and government funding directed to Hong Kong-based start-ups.

The study finds that the pandemic has caused both start-ups and larger corporates to re-evaluate their business models, with a refocus on purpose top-of-mind for organisations.  It examines how priority innovation and technology sectors including artificial intelligence (AI), robotics, biotechnology and smart city can be better enabled through supportive policies ─ calling attention to the need to support growth-stage start-ups as they expand beyond Hong Kong, as well as more cross-collaboration between start-ups and corporates to enrich the ecosystem.

To continue to foster an entrepreneurial mindset and innovation culture in Hong Kong, the study finds that more entrepreneur success stories and role models are needed to inspire younger generations.  In addition, STEAM (science, technology, engineering, arts and mathematics) education needs to be better supported – including providing viable career paths for STEAM graduates. 

Irene Chu

Irene Chu
Partner, Head of New Economy and Life Sciences, Hong Kong
KPMG China

Marcos Chow

Marcos Chow
Partner, Head of Technology Enablement, Hong Kong
KPMG China

Key findings

Impacts of COVID-19

  • 34% of entrepreneurs surveyed have seen increased demand for their products and services during the COVID-19 pandemic, suggesting start-ups’ adaptability and flexibility has enabled opportunities
  • 44% of corporates and 41% of entrepreneurs have had to re-calibrate their operating models as a result of COVID-19
  • 63% of entrepreneurs see their role as finding solutions that address societal needs, highlighting start-ups’ focus on purpose amid the pandemic

Source: KPMG survey analysis

Innovation and technology priority sectors

  • 70% of entrepreneurs and 61% of corporates agree that Hong Kong is a fintech innovation hub
  • Less than half of respondents agree that Hong Kong is an innovation hub for smart city, AI, robotics and biotechnology, highlighting that further support is needed for these areas

KPMG survey analysis

Cultivating an entrepreneurial mindset

  • Over 60% of entrepreneurs, corporates and students see inspiring more young people to be interested in Science, Technology, Engineering, Arts and Mathematics (STEAM) careers as a key development area
  • 32% of students agree that Hong Kong has sufficient entrepreneur success stories and role models, pointing to the need for more examples to inspire younger generations

Source: KPMG survey analysis

VC and funding landscape

  • The number of private venture capital deals in Hong Kong for FY 2019/2020 increased to the highest level on record, amounting to 140 deals with HKD10.89 billion invested
  • Government funding for start-ups nearly doubled to HKD8.27 billion in FY 2019/2020 from HKD4.47 billion in FY 2018/19, benefitting more than 540 companies

Source: KPMG analysis based on data provided by Alibaba Hong Kong Entrepreneurs Fund, Cyberport, Hong Kong Science and Technology Park, Pitchbook, and public data from the HKSAR Innovation and Technology Commission

Start-up expansion into new markets

  • 31% of entrepreneurs polled say their company operates in the nine mainland China cities* within the Greater Bay Area, with 41 percent planning to expand there in the next three years; 26% currently operate in Southeast Asia and 40% planning to expand there
  • 61% of start-ups’ revenues come from the local Hong Kong market, compared with 7% for the nine mainland China GBA cities*, 10% from Southeast Asia, 5% from other mainland China cities and 17% from other markets

Source: KPMG survey analysis

* Includes Dongguan, Foshan, Guangzhou, Huizhou, Jiangmen, Shenzhen, Zhaoqing, Zhongshan and Zhuhai