Latest Legal Update Express [Startups Series] | Top 5 Funding Programmes for Startups

Chase the vision, not the money, the money will end up following you

--Tony Hsieh, co-founder of Zappos

INTRODUCTION

There can be no doubt that the Government of Hong Kong has invested greatly in the city’s bid to become the premier incubation capital for Asia’s start-ups. From setting aside large plots of land to become incubation centres (most notably Science Park and Cyber Port) to setting aside cash to jumpstart entrepreneur’s dreams, the jumpstarting of business ideas have never been easier.

This truth can be seen to persist despite being in the midst of the pandemic years. Here are top 5 government funding options that new business owners and entrepreneurs can look into in Hong Kong:

MAJOR FUNDING FOR START-UPS (circa 2020 & 2021)

  1. The Microfinance Scheme

The Microfinance Scheme is a collaboration organized by The Hong Kong Mortgage Corporation Limited where six of the city’s major banks and three of the city’s major non-government organizations (NGO) to provide new entrepreneurs with the necessary training and financing to jumpstart a business.

The Scheme offers three categories of loans including (i) the Micro Business Start-up Loan, (ii) Self-employment Loan and (iii) Self-enhancement Loan in order to fund application’s training to obtain relevant professional certifications. Successful applicants can get up to HK$300,000 and the maximum loan tenor is five years with an extended repayment holiday of 12 months.

Eligibility: applicants must (i) be incorporated in Hong Kong, (ii) not a Listed Company, (iii) have significant business activity within Hong Kong.

  1. The SME Loan Guarantee Scheme

Is your new start-up suffering from reduced income flow during the pandemic? The SME Financing Guarantee Scheme may help. The scheme aims to help Small Medium Enterprise (as the name suggests) secure loans by providing a government guarantee (so that your company can secure the loan even if you lack the assets to back it).

Eligibility: applicants must (i) be a SME (ii) have most of their operations in Hong Kong under the Business Registration Ordinance (iii) not associated with a participating lending institution and (iv) not a lending business itself.

  1. The Social Innovation and Entrepreneurship Development Fund

Nothing is better than supporting a good cause. The Social Innovation and Entrepreneurship Development Fund (“SIEDF”) is a scheme dedicated to supporting enterprises that address poverty and social exclusion through the use of innovative solutions. The SIEDF assists prospects by connecting them with mentors and helping them gain access to resources.

Eligibility: This program is specifically looking for enterprises that have goals of supporting poverty alleviation and have products/launchable products within 6 months.

  1. The Patent Application Grant

At the heart of every start-up is the entrepreneur’s brainchild, the company’s Intellectual Property (“IP”). Without proper IP protection, the entrepreneur will not have the opportunity to enjoy the fruits of their labour. This is where the Patent Application Grant (“PAG”) comes in.

A collaboration between the Innovation and Technology Commission and Hong Kong Productivity Council (“HKPC”), the PAG is designed to assist local companies with applying for patents of their invention in Hong Kong. The PAG covers all applications for functional patents, inventions with technological elements and industrial application.

Eligibility: All locally incorporated companies OR local residents (with right to abode) who have never owned any patents in any countries or territories before will be eligible for the PAG. For individual applicants, they must be the inventor of their innovation. For corporate applicant, the inventor of the innovation needs to be related to the company.

The PAG is where the Hong Kong incubation environment shines as the government essentially pays for the innovators’ patent application.

  1. The SME Export Marketing Fund

No start-up will reach its potential without ambitious plans for overseas expansion. Hong Kong is, for many serial entrepreneur, the springboard for multinational expansion. The Export Marketing Fund (“EMF”) is the answer for such ambition.

A scheme that aims to provide financial assistance to SMEs to promote their export activities globally, the EMF provides funding for digital marketing campaigns, e-commerce development, mobile applications, international trade fairs participation, local exhibitions and printed publications for international markets. Successful applicants can secure up to HK$800,000 with no limit on the number of applications that can be submitted.

Eligibility: As the name suggests, the company must be an SME and must conform to the government’s definition of an SME. The company must have substantive business in Hong Kong and must not be a vendor providing marketing services to EMF recipients.

CONCLUSION

Whilst the resources for start-ups in Hong Kong are plentiful, always remember:

  1. Documentation: Applicants should always have their company documentation ready. If you want to succeed, you must go in with more than just an idea;
  2. Business Plan: Competition are to be expected. Therefore, spend time to develop a business plan. Not only will it make your application smooth, but your candidacy will also stand out; and
  3. Seek Legal Advice Where Needed: Be sure that you are aware of all restrictions. The grants should afford your company to obtain legal advice. Always remember, prevention is always preferable to mitigation / remedy. Do not be penny wise and pound foolish.
Jurisdictions

Solicitor, ONC Lawyers

Joshua Chu is a Litigation Solicitor qualified to practice in Hong Kong. Before becoming a lawyer, Joshua worked in the healthcare industry serving as the IT department head at a private hospital as well as overseeing their procurement operations.

Since embarking upon his legal career, his past legal experience includes representing the successful party in one of Hong Kong’s first cryptocurrency litigation cases as well as appearing before the Review Body on Bid Challenges under the World Trade Organization Government Procurement Agreement concerning a health care industry related tender.

Today, Joshua’s practice is mainly focused in the field of dispute resolution and technology law.

Aside from his legal practice, Joshua is currently also a Senior Consultant with a regulatory consulting firm which had been founded by ex-SFC Regulators as well as being a management consultant for the Korean Blockchain Centre.

Partner, Ravenscroft & Schmierer, Hong Kong

Anna is a Hong Kong qualified lawyer and is responsible as a partner at Ravenscroft & Schmierer for the commercial litigation department. Aside from her legal background, Anna is also an advisor to the Ohkims Blockchain Centre in South Korea and Hong Kong qualified lawyer and a regulatory consultant specialized in IT control and compliance.  

Before starting her practice as a lawyer, Anna worked closely with the United States Patent and Trademark Office (USPTO) and US Food and Drug Administration (FDA) on intellectual property and FDA regulatory matters. 

​Since embarking on her legal career, Anna was part of the team that defended a party in Hong Kong High Court proceedings involving the jurisdiction’s first cryptocurrency cases where she leveraged her science and engineering skills extensively to help improve her client’s case’s position. This feat was repeated again shortly after when Anna again leveraged her science background in a healthcare-related tender dispute. 

​Today, Anna is proactively working on various Distributed Ledger Technology related projects where she combines her love for science and technology together with the logic behind regulatory framework.