Raising Funds: Let's get Rich!
For the funding, entrepreneurs tend to look for angels, VC or corporate investors. Every kind of investors has their fits and there are suitable ones for different stages of a company.
Typically, VC and corporate investors are by referrals, as they do have too many business cases that they cannot handle. Write-in or getting a cold meeting is almost impossible, and chances for a 2nd look are slim. So one option is to attend industry specific Networkings events, put out an elevator pitch, and perhaps a meeting can be on the way. Other is to expose by Business Plan competitions held by Angels and VCs regularly, from some associations or Chambers, or some similar sorts. And if they know someone who knows some investors, that would be best. To investors, personality / charisma of the founders are of highest priority than the product/services/technology.
Some of the entrepreneurs I spoke with told me that if they had to start it again, they might consider raising more funds earlier, but at the same time, one of them confessed me that they were able to hold onto a lot more of the company by not raising as much as they might. The downside of this is that they have always been doing more with less, which is probably not as efficient with people getting stretched thin with responsibilities. The good point is that they took their time to figure out where they were going with the company, so now if they raise more funds; it is more deliberate and will also be more efficient.
#1 Who are investors?
You have two kinds of investors: on the one hand the ones who invest their own money and on the other hand the ones who invest others’ money.
Invest their own money:
1) Angels (y combinatory; angelsden)
Not really active in HK
Might be up to 10% return on investment
2) Corporate (strategic) (applied materials; dow chemicals; mitsui; sumimoto)
They are companies with spare cash (i.e nokia, Google...) It is good way for them to buy the company they have invested in without losing money in R&D.
Invest the money of others
3) Venture capitalist (early stage)
You can use them during the early stage.
==> IDG (most profitable VC in china); Tsing capitalist (green specialisation); GSR; Walden; matrix; ITIC; GVT; Top Taiwan; Sinostar; 3vs1; Cathay
They will look at high risk project in order to get a high return. They invest in people who already started companies and they like people who even failed in the past. It means you have learned something (1-3). People tend to use VC to skill up the business.
Profile of companies they are investing in: you must have a prototype or be in the stage of pre-profit
HOWEVER, it is very difficult to attract them. You must be referred by someone or go to this Pitch Contest.
4) Private equity
You can use them during the expansion growth stage
==> HKVCA; IFS, Vickers
#2 Pitch process to investors >9 months to closing
a) Elevator pitch
b) Introducing meeting
c) Release material/ non-disclosure agreement
d) DD (tech, ip, team)
Investors Communication meeting (1every 3 month in general, the purpose is to choose the e) project they will invest in + follow up)
f) Term sheet (negotiable)
g) Agreement
IC meeting (money within 2 weeks after)
h) Fund close
#3 Business plan
There is a comprehensive Business Plan Guide from Yahoo Small Business which I believe is very useful for the kick-start process to any Startup. It is in 8 parts, and you can find all the links towards the end of this Part 8 article:
http://smallbusiness.yahoo.com/advisor/run-a-cost-analysis-for-your-business-as-you-start-it-up--part-8-of-the-smart-and-simple-guide-to-starting-a-business--211103987.html
#4 Success
Vision + Goals + Plan
Luigi La Tona (Director BD, Harbour Times) makes a cautionary tale of Hong Kong
Why did you decide to come in HK?
When I was studying at the University, I saw this internship advertisement for Hong Kong and I just took the opportunity. The reason I am still in Hong Kong is that there has been a relentless wave of opportunities since I am here. Besides, the lifestyle was important for me. I needed to find one that could be equal to the one in Vancouver (sport, social…), and here that is perfect.
What is the current economic situation in Hong-Kong?
I believe the economic situation of Hong-Kong can be compared to its real estate’s prices and where you find a slow growth, it usually means that the pace of the economy will also grow slower. There is limited space in what we can build on. We have a situation right now that is about to drop. Previously it has dropped because of insecurity in the market, 1997, 2003 etc.. but it always came back. But now the situation is different. You don’t have a great return on investment at today’s rate. Houses are getting smaller and smaller, spaces are tighter and tighter and land is getting more constrained. So I don’t see HK growing rapidly indefinitely but it will of course continue to grow.
Are you saying the business is in jeopardize in HK?
No, business is doing great, but HK faces a lot of competition with Singapore and Shanghai, so when I talk to friend and they tell me that they are moving to Shanghai because the potential is bigger it makes a lot of sense. I think HK is still doing great and for years is still going attract many businesses.
With the drop of the real estate’s prices, are we going to see more opportunities?
I spoke to a real estate agent yesterday and he told me that it could take years to see the correction that is about to happen to begin to climb once more to current levels.
Are there any threats to HK’s growth?
Regional threats. People are also scared of the air condition. Besides the Expat packaging is not the same as a couple of years ago. It does not suit the HK lifestyle, mainly due to the rent. That is where other cities are in competition. If you cannot afford to be in HK as a family, you won’t come to HK. I have met so many entrepreneurs who told me they would get a shop in Central. They do and after they just go out of business. Because it is really expensive and it does not worth it.
You have to get your business good outside of central. You can be anywhere, as long as your product is good. You have to deliver a great customer service, a unique service.
Is it difficult for foreign entrepreneurs to set up a business in HK?
It is a very easy. It costs you a few thousands HKD. I actually even myself set one up, just because I could. It costs me 5000HKD, it is here, if I want to set up my own business, it will be great. However if you want to start your own business here you have to present a business plan to the government to formally start, you have to prove that you are going to hire locally within a year.
What are the major industries in Hong Kong?
Finance and it will always be finance. Hong Kong was an industrial area until everything moved to elsewhere and then to China…which is even now in competition with other growing markets including Vietnam, Bangladesh, and others. HK has been a huge services area. You have a lot of different creative people, agencies, to get into China, but the market in HK is very small. We are talking about 7millions people of which many are strictly middle class. You have a lot of companies that are “entrench” here. HK is your gateway to China: the number one reason!
What are the main opportunities in Hong Kong?
There is going to be a diversification of services, it will always be about services in Hong Kong.
When I was studying at the University, I saw this internship advertisement for Hong Kong and I just took the opportunity. The reason I am still in Hong Kong is that there has been a relentless wave of opportunities since I am here. Besides, the lifestyle was important for me. I needed to find one that could be equal to the one in Vancouver (sport, social…), and here that is perfect.
What is the current economic situation in Hong-Kong?
I believe the economic situation of Hong-Kong can be compared to its real estate’s prices and where you find a slow growth, it usually means that the pace of the economy will also grow slower. There is limited space in what we can build on. We have a situation right now that is about to drop. Previously it has dropped because of insecurity in the market, 1997, 2003 etc.. but it always came back. But now the situation is different. You don’t have a great return on investment at today’s rate. Houses are getting smaller and smaller, spaces are tighter and tighter and land is getting more constrained. So I don’t see HK growing rapidly indefinitely but it will of course continue to grow.
Are you saying the business is in jeopardize in HK?
No, business is doing great, but HK faces a lot of competition with Singapore and Shanghai, so when I talk to friend and they tell me that they are moving to Shanghai because the potential is bigger it makes a lot of sense. I think HK is still doing great and for years is still going attract many businesses.
With the drop of the real estate’s prices, are we going to see more opportunities?
I spoke to a real estate agent yesterday and he told me that it could take years to see the correction that is about to happen to begin to climb once more to current levels.
Are there any threats to HK’s growth?
Regional threats. People are also scared of the air condition. Besides the Expat packaging is not the same as a couple of years ago. It does not suit the HK lifestyle, mainly due to the rent. That is where other cities are in competition. If you cannot afford to be in HK as a family, you won’t come to HK. I have met so many entrepreneurs who told me they would get a shop in Central. They do and after they just go out of business. Because it is really expensive and it does not worth it.
You have to get your business good outside of central. You can be anywhere, as long as your product is good. You have to deliver a great customer service, a unique service.
Is it difficult for foreign entrepreneurs to set up a business in HK?
It is a very easy. It costs you a few thousands HKD. I actually even myself set one up, just because I could. It costs me 5000HKD, it is here, if I want to set up my own business, it will be great. However if you want to start your own business here you have to present a business plan to the government to formally start, you have to prove that you are going to hire locally within a year.
What are the major industries in Hong Kong?
Finance and it will always be finance. Hong Kong was an industrial area until everything moved to elsewhere and then to China…which is even now in competition with other growing markets including Vietnam, Bangladesh, and others. HK has been a huge services area. You have a lot of different creative people, agencies, to get into China, but the market in HK is very small. We are talking about 7millions people of which many are strictly middle class. You have a lot of companies that are “entrench” here. HK is your gateway to China: the number one reason!
What are the main opportunities in Hong Kong?
There is going to be a diversification of services, it will always be about services in Hong Kong.
Entrepreneurship forecast in HK: Excellent condition!
There is one report that all
Adventrepreneurs need to know: the annual report “Doing Business” made by the
word bank. This survey offers the rank of 185 countries where we can find the
best conditions to set up a company. In 2013, the survey ranked Hong Kong as
the second best city (Singapore as 1st). Among the criteria, we can
find the time to create, to obtain a building license and business taxation.
http://www.doingbusiness.org/
http://www.doingbusiness.org/
The hottest entrepreneurial networking groups you should join in 2014
You will find plenty of
entrepreneurs clubs, associations and meetings in Hong Kong. Join them, introduce yourself and you will meet amazing entreprenreurs happy to share their knowledge and contacts with you.
The (great) outsiders:
#1 Start-up Resources http://www.meetup.com/StartupResources/
#2 Fashion & Retail Business Development HK http://www.meetup.com/Fashion-Retail-Business-Developnent-Hong-Kong/
#3 HK business planning & performance management for SME http://www.meetup.com/Hong-Kong-Business-Plan/
#4 Hong Kong Business owners http://www.meetup.com/hkbo66/
#5 Hong Kong Freelancers & SME meetup Group http://www.meetup.com/hong-kong-freelancers-smes/
#6 Funders and Founders http://www.meetup.com/Hong-Kong-Funders-and-Founders/
The Big:
#1 Entrepreneurs HK http://entrepreneurhk.org/
#2 Cocoon entrepreneurship http://www.hkcocoon.org/en/index.aspx#2
#3 The entrepreneurs Network http://www.entrepreneurs.com.hk/
#4 Drink Entrepreneurs https://www.facebook.com/DrinkentrepreneursHK
The Tech:
#1 Clean Tech Tuesday http://cleantuesday.asia/
#2 Web Wednesday http://www.webwednesday.hk/
#3 Baker Tilly Hong Kong http://www.bakertillyhk.com
#4 Codeaholics http://codeaholics.hk/
#5 Mobile Monday http://www.momohongkong.com/
#6 Open Data Hong Kong http://opendatahk.com/
#7 SME Creativity Center http://www.smecc.hk/
#8 Startup Grind http://startupgrind.com/
#9 Tie HK https://hk.tie.org/
#10 Startup Weekend HK http://hongkong.startupweekend.org/
#11 HackJam http://www.meetup.com/dimsumlabs/
#12 StartWareHK follow Jon Buford for updates https://twitter.com/jonbuford
The (great) outsiders:
#1 Start-up Resources http://www.meetup.com/StartupResources/
#2 Fashion & Retail Business Development HK http://www.meetup.com/Fashion-Retail-Business-Developnent-Hong-Kong/
#3 HK business planning & performance management for SME http://www.meetup.com/Hong-Kong-Business-Plan/
#4 Hong Kong Business owners http://www.meetup.com/hkbo66/
#5 Hong Kong Freelancers & SME meetup Group http://www.meetup.com/hong-kong-freelancers-smes/
#6 Funders and Founders http://www.meetup.com/Hong-Kong-Funders-and-Founders/
The Big:
#1 Entrepreneurs HK http://entrepreneurhk.org/
#2 Cocoon entrepreneurship http://www.hkcocoon.org/en/index.aspx#2
#3 The entrepreneurs Network http://www.entrepreneurs.com.hk/
#4 Drink Entrepreneurs https://www.facebook.com/DrinkentrepreneursHK
The Tech:
#1 Clean Tech Tuesday http://cleantuesday.asia/
#2 Web Wednesday http://www.webwednesday.hk/
#3 Baker Tilly Hong Kong http://www.bakertillyhk.com
#4 Codeaholics http://codeaholics.hk/
#5 Mobile Monday http://www.momohongkong.com/
#6 Open Data Hong Kong http://opendatahk.com/
#7 SME Creativity Center http://www.smecc.hk/
#8 Startup Grind http://startupgrind.com/
#9 Tie HK https://hk.tie.org/
#10 Startup Weekend HK http://hongkong.startupweekend.org/
#11 HackJam http://www.meetup.com/dimsumlabs/
#12 StartWareHK follow Jon Buford for updates https://twitter.com/jonbuford
29/01/2014
Marketing in Hong-Kong with
Sarah Schoenwald, the current Associate Regional Account at Young & Rubicam, a global advertisement agency. She is going to tell us what every entrepreneurs need to know about marketing in Hong-Kong.
Hi Sarah, how did you arrive in Hong Kong?
Hi Michael, I came in Hong Kong in order to follow my husband, a student of the EDHEC BUSINESS SCHOOL just like me. His firm sent him in HK and we decided to go their together. At that time, I was working at Y&R in Paris, a global advertisement agency. I have been lucky because a post at Y&R HK was free for me. Actually, the past employee went on maternity leave. It means that she will be back and I will have to find another post. For now, I am the Associate Regional Account Director at Y&R. It is fantastic to work in HK.
What is the most important ingredient when you create a new communication campaign?
The most important is the “Reclam” (the French word she gave to describe the communication environment in Asia). What I mean is that in Asia you must target the convenience of your product and show it to your segmentation. It is not like in Europe, there is not any real need of creativity, so you just have to state all the real benefits of the product. It is not about emotions, it is all about facts. For example, I am currently working on the advertisement of a Colgate product and I suggested promoting the product through a mobile phone game as Chinese and HK people spend LOADS of time on their mobile phone. All my colleagues looked at me with big eyes because for them it is not directly linked to the product. The marketing in Asia has nothing to do with the western marketing.
Which distribution channels are dominant in Asia?
As far as I am concerned, I am mainly working with the digital and television.
How can you describe the Hong Kong population?
First, both locals and expats are important to take into account when you create an advertisement campaign. Locals are obviously the most important part of the HK population.
Second, local young adults might have more money to spend because they usually still live with their parents. The rent in HK is exorbitant and the family is really important in their tradition.
What else can you tell us about Hong Kong?
The future entrepreneurs who will read this post must be very careful with the Feng Shui. They have to integrate it in their strategy and all their decisions. It is by far one of the most important things. It encompasses everything, from the color of the wall to the design of a building. When our office moved, we called a FS master who designed everything: the orientation of the desks, the opening day AND opening time; absolutely everything.
Marketing in Hong-Kong with
Sarah Schoenwald, the current Associate Regional Account at Young & Rubicam, a global advertisement agency. She is going to tell us what every entrepreneurs need to know about marketing in Hong-Kong.
Hi Sarah, how did you arrive in Hong Kong?
Hi Michael, I came in Hong Kong in order to follow my husband, a student of the EDHEC BUSINESS SCHOOL just like me. His firm sent him in HK and we decided to go their together. At that time, I was working at Y&R in Paris, a global advertisement agency. I have been lucky because a post at Y&R HK was free for me. Actually, the past employee went on maternity leave. It means that she will be back and I will have to find another post. For now, I am the Associate Regional Account Director at Y&R. It is fantastic to work in HK.
What is the most important ingredient when you create a new communication campaign?
The most important is the “Reclam” (the French word she gave to describe the communication environment in Asia). What I mean is that in Asia you must target the convenience of your product and show it to your segmentation. It is not like in Europe, there is not any real need of creativity, so you just have to state all the real benefits of the product. It is not about emotions, it is all about facts. For example, I am currently working on the advertisement of a Colgate product and I suggested promoting the product through a mobile phone game as Chinese and HK people spend LOADS of time on their mobile phone. All my colleagues looked at me with big eyes because for them it is not directly linked to the product. The marketing in Asia has nothing to do with the western marketing.
Which distribution channels are dominant in Asia?
As far as I am concerned, I am mainly working with the digital and television.
How can you describe the Hong Kong population?
First, both locals and expats are important to take into account when you create an advertisement campaign. Locals are obviously the most important part of the HK population.
Second, local young adults might have more money to spend because they usually still live with their parents. The rent in HK is exorbitant and the family is really important in their tradition.
What else can you tell us about Hong Kong?
The future entrepreneurs who will read this post must be very careful with the Feng Shui. They have to integrate it in their strategy and all their decisions. It is by far one of the most important things. It encompasses everything, from the color of the wall to the design of a building. When our office moved, we called a FS master who designed everything: the orientation of the desks, the opening day AND opening time; absolutely everything.