Some observers are suggesting that aspects of Hong Kong's economy are quietly undergoing a renaissance. Others believe the territory is struggling to remain relevant in an increasingly competitive and interdependent world and perhaps it needs to reinvent itself. One glimmer of hope appears to lie in the form of an emerging tech start-up community focused on developing the next disruptive technology that will revolutionize our lives. But can Hong Kong provide the environment and expertise needed for this to happen?

Over the past couple of years the presence of an emerging tech start-up community has become increasingly evident. The key players are of course the growing band of intrepid entrepreneurs who believe they have the next big idea and the ability to build a global brand or business.

Many of these bright young people are locals who otherwise may be facing pretty bleak futures with limited job opportunities. Many of the others have arrived from Europe, the US or elsewhere and have chosen Hong Kong as the preferred location to base their start-up operations.

The choice of location may simply reflect the economic constraints and lack of opportunity in their home countries. On the other hand, for many, the perception remains that Hong Kong is the gateway to the mainland and indeed a convenient location from which to access the broader region. CNN's 2014 ranking of Hong Kong as one of the top 10 emerging cities for start-ups has probably also fuelled interest in the territory.

The projected growth across the Asian region alone offers a compelling case for choosing Hong Kong. Proximity and easy access to other regional growth engines offer easy access to emerging and frontier markets with huge potential for many products or services. Most entrepreneurs would also agree that the territory provides a better environment for start-ups and with a high rate of failure this definitely adds to the attraction. The metaphorical Phoenix does have the opportunity to rise from the ashes.

In order to stimulate and facilitate these early innovators and entrepre

neurs, a number of critical ingredients are required of which thankfully, there is an abundance of in Hong Kong. For many start-ups family and friends are generally the first-stage investors which kick-start the development process. But even at this early stage a whole new ecosystem has developed to support these fearless spirits. One that provides advice, seed capital and the range of support services required to enable a business to develop to the next stage in a contest where the majority of new business projects fail.

Leading the way are the waves of angel or early stage investors, incubators, mentors along with a host of other support service providers. All can regularly be seen at the increasing number of start-up pitch and networking events that are becoming a regular part of daily business life.

This support can be very helpful if the best players become part of the core team. The value of services provided in return for equity can sometimes make the difference between success and failure. However, it can also equate to substantial cash equivalents. In many cases actual cash investments in these early-stage businesses seem to be lagging behind. Perhaps there is a tendency in Hong Kong for too many support service providers to chase the early stage investors rather than provide some of that early stage funding.

The angel or seed investors are those other brave spirits that understand the value of early stage investment and the associated risk/return profile, but who are themselves financially secure and happy for part of their investment portfolio to carry a higher risk.

The government has been proactive in providing an infrastructure to support the start-ups and early stage companies that possess the technical innovation and management potential to become successful. A good example of this is the Hong Kong Science and Technology Park. This is home to almost 350 companies mainly focusing on biotechnology; electronics, green technology, information, communications technology and material and precision engineering. Late last year, its third phase opened to accommodate a further 22 companies in the first instance.

There is also Cyberport which, after a faltering beginning, now offers a full suite of support services during all stages of development. It is home to a creative digital community with over 300 technology and digital companies.

Other recent initiatives include the government's announcement of the Innovation and Technology Bureau. However, the HK$35 million required for the project was not approved during a recent meeting of Legislative Council Finance Committee members so it may be some time before this project materializes.

A more promising note was Jack Ma's recent announcement of a HK$1 billion investment fund established to support aspiring Hong Kong entrepreneurs establishing start-ups on the Hangzhou company's e-commerce platform. Alibaba has also committed to providing 200 internships every year for graduates to work in the company. All of this is highly encouraging and will no doubt provide a much needed boost, assuming all goes to plan.

There are undoubtedly some positive signals at grass roots level. An infrastructure is developing which is capable of enabling and accelerating sustainable growth and providing eventual access to markets.

Amid all of this activity and coupled with the fact that the population of Hong Kong is double that of Silicon Valley, some put forward a case for the potential for the territory to become the Silicon Valley of Asia. However, there are a myriad of alternative locations throughout the region that are equally or more attractive. An increasing number have a more focused approach, have received formidable support from their local business and government leaders, and are better resourced with better access to the talent pool. So despite the glimmer of hope, perhaps Hong Kong has a long way to go.

(HK Edition 03/09/2015 page9)