What is a startup?

A startup is typically defined as a company founded within the last 5 to 7 years, actively engaged in or having completed government-funded or the Cyberport/Science Park Incubation/Acceleration Programmes, and possessing no more than 2 years of operational history. Startups participating in the Cyberport Incubation Programme can access up to HK$500,000 in financial aid within a specified 24-month period, while the Cyberport Accelerator Support Programme offers up to HK$300,000 in support.

In a broader context, startups are initiated by founders who initially self-finance and then seek backing from venture capitalists for funding, expertise, technology, and management guidance. Generally, startups demonstrate high growth potential, pursuing rapid expansion and market penetration through innovative technologies or business models.

Traditional businesses vs. startups

Traditional companies and startups differ significantly in their business philosophies and operational models. The most significant contrast lies in their growth approaches – traditional companies typically aim for stable growth, emphasising steady revenue increases year by year with a relatively conservative risk appetite. On the other hand, startups pursue rapid expansion, even if it means enduring short-term losses, investing in potential explosive growth for the future.

Ecosystems and trend for Hong Kong startups in 2024

The government of Hong Kong SAR is committed to building a startup ecosystem, providing opportunities and financial support for startup enterprises. Hong Kong Science and Technology Park (HKSTP) and Cyberport serve as two major entrepreneurial hubs, attracting a large number of startups. As of 2023, there is a record high of 4,257 startup enterprises in Hong Kong, employing 16,453 employees, representing increases of 34% and 32% respectively compared to 2019. Locals make up 68% of the workforce, while 26% come from outside Hong Kong, primarily from China, the UK, the US, France, and Australia. For detailed statistics of Hong Kong startups, download the data here.

Characterised by high adaptability, flexible adjustments, innovation-driven technologies, and efficiency, Hong Kong startups span across diverse industries. According to a survey finalised by Invest Hong Kong in September 2023, fintech is the most prevalent industry among startups, followed by "E-commerce/Supply Chain Management/Logistics Technology," "Information Technology, Computers, and Technology," and "Education and Learning." The rising interest in food safety enhances the potential of Food Technology.

StartmeupHK, an initiative by InvestHK, hosted a startup festival in 2024 themed "A Future Unlimited", covering various trending topics in the market, including artificial intelligence (AI), web3, GameFi, responsible tech, healthtech, sustainability, and more. Fintech remains central to the 2025 startup landscape.

Steps for setting up a startup

Establishing a startup enterprise follows similar steps to setting up a general company. The three key steps in creating a startup include:

1. Company Registration and Business Registration

Visit the website of the Hong Kong Companies Registry to submit your application. First, select a company type (limited or a guarantee), and propose a company name. Typically, entrepreneurs opt for a limited company, as the legal liability of company members is limited to the unpaid amount on their shares as specified in the articles of association. Non-profit organisations often register as guarantee companies.

Submit required documents and fees electronically through the "e-Registry" or in person at the 14th-floor Revenue Office at Queensway. Upon approval, you can download or collect the "Certificate of Incorporation and Business Registration Certificate” either digitally or in print – both holding the same legal validity. With these documents, you can set up a company account and manage your financial records.

2. Building a team

In the early stages, startups with limited initial operating capital need founders to prioritise forming a proficient and creative team. As the company stabilises operations and market trends align with business growth, businesses can start considering talent recruitment strategies, developing corporate culture, or attracting and retaining talent using equity incentives.

3. Fundraising and financing

Startups need funding at different development phases. Initially, founders can seek investment beyond personal funds, such as seed rounds or angel investors, or apply for government entrepreneurial support.

Before seeking financing or applying for government grants, founders should craft a robust business plan, detailed financial projections, precise valuation models, and a persuasive pitch. On the other hand, founders should also consider the strategic value that investors can bring to the long-term development of the startup.

Challenges faced by startups – opening a business account

Startups often face challenges in opening business accounts, especially with traditional banks due to limited capital, complex processes, and lengthy approval times.

Startups can consider Airwallex, the all-in-one financial and cross-border payment platform for corporate account services. The 24/7 account set-up is simple and fast, and has no account setup fees or additional hidden charges. Once registered, businesses can access a range of Airwallex products, including multi-currency accounts, global payment solutions, competitive cross-border exchange rates, and corporate cards.

Financial cycles and operations

The financing cycle for startups typically progresses through multiple growth and development stages, with funding requirements increasing gradually.

The "2023 Asia's 100 Most Promising Companies" list by Forbes Asia highlights 15 startups from Hong Kong, with nearly half in biotechnology and healthcare, and four in finance. Investors include universities like HKUST, CUHK, and CityU. This indicates that promising startups have garnered significant investor interest early in their development.

Generally, the financing cycle for startups can be divided into the following stages:

1. Seed pre-seed: The earliest financing stage where funds come from founders, family, or friends.

2. Seed round: The first formal equity financing stage, often involving angel investors, incubation programs, and venture capital firms. Startups typically need 12 to 18 months to generate revenue and secure the next round of funding, ranging from HK$1 to $5 million.

3. Series A: Involves introducing traditional venture capital funds, ranging from $2 to $15 million.

4. Series B: Scaling business operations, transitioning from development to growth, with average investment amounts reaching up to $32 million.

5. Series C and beyond: Companies have achieved success and seek larger market shares. Series C is typically the final funding stage for startups, with an average funding amount of $55 million.

What startup resources are available in Hong Kong?

Hong Kong has various funding sources for startups, primarily through government grants and private venture funds. To further gain resources, save costs, and increase profits, here are three key pathways:

1. Angel funds

Angel funds provide early-stage capital from experienced individual angel investors or angel investment organisations, offering collaboration, investment, and mentorship opportunities. These investments typically target startups in their early development stages.

In Hong Kong, an angel investment fund was established in 2014 and registered as a non-profit organisation in 2019. It focuses on innovative startup financing training, support for startups and SMEs, early-stage project incubation, investment facilitation, and direct participation in innovative entrepreneurship investments. 

Its lead initiative, the “Enterprise Innovation Investment 100" programme, aims to fund 100 Hong Kong companies through non-equity investments, encouraging startups registered for no more than seven years to apply for government funding.

2. Government funding programmes and support

The government of HKSAR is committed to supporting startups and SMEs, with various departments and statutory bodies offering services, including Cyberport, HKSTP, the Hong Kong Trade Development Council, and Hong Kong Productivity Council.

There are now 11 funding programs available. These include the Cyberport Creative Micro Fund, Cyberport Incubation Program, Design Incubation Program, Cyberport Macro Fund, and HKSTP's Acceleration Programme.

Additionally, other government departments, such as the Innovation, Technology and Industry Bureau, have optimised the Innovation and Technology Venture Fund, allocating HK$1.5 billion to establish joint funds with the industry, investing in strategic industry startups. They have also launched the I&T Accelerator Pilot Scheme with a funding allocation of HK$180 million and a maximum funding limit of HK$30 million to attract professional startup service organisations from both local and overseas to establish accelerator bases in Hong Kong

3. Airwallex for Startup

Airwallex offers exclusive perks for new customers in the Cyberport or Hong Kong Science Park programmes. Join now to enjoy free employee card activation, 1% cashback on local and overseas card spending, six months of free Expense Management for up to 20 cardholders, and waiver of payment gateway fees of up to HK$300,000 or equivalent in the first six months. 

These benefits help startups navigate account opening challenges and cost savings, supporting future product development and business operations. ‌Additionally, eligible startups can access various discounts from Airwallex's partners, including Bowtie, Agoda, Expedia, Google Ads, and more.