As an accountant that focuses on SMEs and startups, it always surprises me to hear how few of the startups apply for government funding. Although we aren’t a startup, we have taken advantage of the Hong Kong Productivity Council’s TVP fund. Our online client booking system was a direct result of the TVP funding. That is why we highly recommend all startup founders and SME directors to familiarise themselves with the different types of government funds that provide funding to qualifying companies.
Why Startups should apply for government funding before going to VCs
In fact, we urge founders to pursue government funding before they approach venture capitalists and angel investors, because:
- Most government funding does not need to be paid back
- You don’t need to give up equity in your own company to secure government funding
- The milestones requirements are not related to revenue or customer growth
- This funding is available to pre-revenue startups that have yet to show any traction
- By using government funding to build your Minimum Viable Product and building some traction by figuring out product market fit, when you do approach angel investors and venture capitalists, you will be able to raise at a higher valuation
Hong Kong Government is determined to grow the Tech Startup ecosystem
In an attempt to encourage growth, the Hong Kong government has increasingly introduced initiatives to grow Hong Kong into a tech hub. There are close to 50 different government initiatives and programs meant to provide small businesses and startups in Hong Kong with funding and business resources. The most popular funding programs are based out of Cyberport and Hong Kong Science & Technology Parks (Science Park). While the Hong Kong Productivity Council has the TVP and BUD funds, which are popular choices with companies looking to fund their digital transformation projects.
Cyberport Incubation Program
Funding: up to HK$500,000
The Cyberport Incubation Program is arguably the most well-known incubation program in Hong Kong. GoGoVan and Klook both started out in this incubation program and went on to become unicorns. Aside from funding, Cyberport will also provide you with office space, program events, and professional services. Graduates of this incubation program will also have a chance to raise their Series A funding round with the Cyberport Macro Fund.
Requirements:
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- The company must have been incorporated within 7 years and limited by shares
- The product or service must be ready to go to market in 12 to 18 months
- The applicant must be a majority owner
- There needs to be some form of local Hong Kong presence
For more information, visit their website here
HKSTP Incubation Program
Funding: up to HK$1,290,000
Hong Kong Science & Technology Parks offers a 3 year HKSTP Incubation Program. The difference from the Cyberport program being that this program is for startups that are a little bit further into their development. Applicants of the HKSTP Incubation program should already have their minimum viable product (MVP) and is actively testing it in the market. The HKSTP Incubation program can offer up to HK$1,290,000 to successful applicants.
Requirements:
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- The limited company must have been incorporated within 5 years of application date and is tech based
- There is a minimum viable product
- The applicants are majority owners
- At least 2 full time staff must be working on site in Science Park, and half the team must be involved in research and development
For more information, visit their website here
HKSTP Elevator Pitch Competition
Funding: up to US$5,000,000 (HK$38m?)
We included the HKSTP pitch in our top funding opportunities because it is rare for government funds to offer cheques this big for early stage startups. The Elevator Pitch Competition is a 60 seconds pitch in front of a panel of judges competing against other startups for up to US$5,000,000 of funding! The panel will judge the pitches based on the uniqueness, level of innovation, market opportunity, growth potential, and strategy.
For more information, visit their website here
HKSTP Ideation
Funding: HK$100,000
The Ideation fund is for early stage startups in the seed funding stage. The highlight of this program is that it will designate a specific business mentor. The program also provides training for the founders in the program and hopes to equip founders with vital skills like pitching and business modelling. The program will also provide work space in the Science Park co-working space.
Requirements:
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- Limited company incorporated within 2 years of application date
- Applicants are aged 18 or above
- A comprehensive business plan that includes innovative ideas which require research and development
For more information, visit their website here
Incu-Bio Incubation Programme
Funding: HK$4,000,000 Grant and HK$2,000,000 for clinical trials
The Incu-Bio Incubation Programme is another Science Park program, the difference being the focus on the startups in the biomedical field. The program offers workspace and similar business resources as the other Science Park funds. However, the biggest advantage this incubation program offers is the direct access founders will have with large biomedical and pharmaceutical companies collaborating with Science Park.
Requirements:
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- Hong Kong company incorporated within 2 years of application date
- The company cannot be already enrolled in another incubation program from Science Park, Cyberport, or Hong Kong Design Centre
- The company must have a focus in either: diagnostic, therapeutic, medical devices, or other biomedical areas
- The technology must be original and innovative with potential for commercialization
For more information, visit their website here
BUD Fund: Dedicated Fund on Branding, Upgrading and Domestic Sales
Funding: up to HK$1,000,000 per project and capped at HK$7,000,000 per enterprise
This program is meant for Hong Kong companies looking to expand into the Mainland China markets or overseas markets which Hong Kong has Free Trade Agreements with. However, this program approves funding on a matching basis, meaning they will only fund up to 50% of the total project budget. The program also has an “Easy BUD” stream that allows for expedited approvals with funding up to HK$100,000 per project.
Requirements:
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- Non-listed Hong Kong company
- Projects with a focus on branding, upgrading and restructuring, or promoting sales in Mainland China or other countries Hong Kong has signed a Free Trade Agreement with
For more information, visit their website here
TVP Fund: Technology Voucher Programme
Funding: up to HK$600,000 on a matching basis – 3:1 (TVP:Applicant)
The TVP program is for companies that have projects with a technology or digital transformation focus. The program provides a list of typical projects that the program deems appropriate. However, the applicant is free to submit other projects. (Our accounting firm was one of the recipients of this fund, our online booking system (LINK) and online request for quotation (LINK) was developed using the TVP fund!
Requirements:
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- Non-listed Hong Kong company
- Substantive business operations in Hong Kong
For more information, visit their website here
Funding Audits:
Most funding programs will have a requirement for the applicants to have their projects audited by a Practicing CPA to ensure that the applicants have used the funds according to their proposals and that they applicants have complied with the requirements of the programs.
We offer TVP audits, BUD audits, Cyberport Incubation Programme audits, and HKSTP Incubation Programme audits at HK$3,000 per project, which is fully reimbursable by the programs.
A Guideline for audit price ranges to expect for your company.
