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
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)
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.
2. 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.
3. 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.
4. 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.
5. 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.
Whilst the resources for start-ups in Hong Kong are plentiful, always remember:
Documentation: Applicants should always have their company documentation ready. If you want to succeed, you must go in with more than just an idea;
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
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.
This article is co-authored by Joshua Chu from ONC Lawyers