Latest Express Legal Update [Startups Series] | Top 5 funding programs for startups
“Chase the vision, not the money, the money will eventually follow you“
–Tony Hsieh, co-founder of Zappos
There is no doubt that the Hong Kong government has invested heavily in the city’s bid to become the first incubation capital for Asian start-ups. Whether setting aside large plots of land to become incubation centers (including Science Park and Cyber ââPort) or setting aside money to launch entrepreneurial dreams, the Starting business ideas has never been easier.
It can be seen that this truth persists despite the years of the pandemic. Here are the top 5 public finance options that new business owners and entrepreneurs can consider in Hong Kong:
MAJOR FUNDING FOR START-UPS (around 2020 & 2021)
1. The microfinance program
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-governmental organizations (NGOs) provide new entrepreneurs with the training and financing needed to start a business.
The Plan offers three categories of loans, including (I) the Micro Enterprise Creation Loan, (ii) Loan for self-employment and (iii) Self-improvement loan to fund the training of the application to obtain the relevant professional certifications. Successful applicants can get up to HK $ 300,000 and the maximum loan term is five years with an extended repayment leave of 12 months.
Eligibility: Applicants must (i) be incorporated in Hong Kong, (ii) not be a listed company, (iii) have significant business activity in Hong Kong.
2. The SME loan guarantee scheme
Is your new start-up suffering from reduced income stream during the pandemic? The SME finance guarantee system can be useful. The program aims to help small and medium-sized businesses (as the name suggests) get loans by providing a government guarantee (so your business can secure the loan even if you don’t have the assets to secure it).
Eligibility: Applicants must (i) be an SME (ii) have most of their operations in Hong Kong under the Business Registration Ordinance (iii) not be associated with a participating credit institution and ( iv) not be a loan company itself.
3. The Fund for Social Innovation and Entrepreneurship Development
Nothing better than supporting a good cause. The Fund for Social Innovation and Entrepreneurship Development (“SIEDFâ) Is a program designed to support companies fighting against poverty and social exclusion through the use of innovative solutions. SIEDF supports prospects by putting them in touch with mentors and helping them access resources.
Eligibility: This program is specifically looking for companies that aim to support poverty reduction and that have products / products that can be launched within 6 months.
4. The grant of the patent application
At the heart of every start-up is the entrepreneur’s original idea, the company’s intellectual property (“IP“). Without proper intellectual property protection, the entrepreneur will not be able to enjoy the fruits of his labor. This is where the grant of the patent application (“PAG“) Between.
A collaboration between the Innovation and Technology Commission and the Hong Kong Productivity Council (“HKPC“), the PAG is designed to help local companies file patents for their invention in Hong Kong. The PAG covers all functional patent applications, inventions with technological elements and industrial application.
Eligibility: All locally incorporated companies OR local residents (with residency rights) who have never held patents in any country or territory before will be eligible for the PAG. For individual applicants, they must be the inventor of their innovation. For the business applicant, the inventor of the innovation must be linked to the business.
The PAG is where Hong Kong’s incubation environment shines, as the government basically pays for the patent application of innovators.
5. The SME Export Marketing Fund
No start-up will reach its potential without ambitious plans for expansion abroad. Hong Kong is, for many serial entrepreneurs, the springboard for multinational expansion. The Export Marketing Fund (“CEM“) is the answer to such an ambition.
A program that aims to provide financial assistance to SMEs to promote their export activities on a global scale, the EMF finances digital marketing campaigns, the development of e-commerce, mobile applications, participation in international trade fairs , local exhibitions and print publications for international markets. Successful applicants can get up to HK $ 800,000 without limiting the number of applications that can be submitted.
Eligibility: As the name suggests, the business must be an SME and must comply with the government definition of an SME. The company must have substantial activities in Hong Kong and must not be a supplier providing marketing services to recipients of electromagnetic fields.
While resources for start-ups in Hong Kong are plentiful, never forget:
- Documentation: Applicants should always have their company documents handy. If you want to be successful, you have to go with more than just an idea;
- Business plan : Competition is to be expected. Therefore, take the time to develop a business plan. Not only will this make your application easier, but your application will also stand out; and
- Seek legal advice when needed: Make sure you know all the restrictions. The grants should allow your business to obtain legal advice. Always remember, prevention is always better than mitigation / cure. Don’t be penny wise and pound stupid.
This article is co-authored by Anna Lau of Ravenscroft & Schmierer