Hong Kong Tech Acceleration: Role of Cyberport

This year, the hottest destination for talent is undoubtedly Hong Kong, where the emphasis on technology has reached an unprecedented level. Faced with the global wave of new technologies, Hong Kong is accelerating its transformation from an economy dominated by finance and real estate to innovative technology industries such as artificial intelligence and Web3.0. From supporting and encouraging the commercialization of university research results, to building the Hong Kong Artificial Intelligence Supercomputing Center to establish infrastructure for the AI era, to investing 20 billion Hong Kong dollars in the "Industry-Academia-Research 1+ Program" and the "New Industrialization Funding Program"... Behind this series of huge investments, there is a firm determination to develop the innovation and technology industry in the Hong Kong Special Administrative Region.

Recently, the reporter learned from the 2024 Cyberport Venture Investment Forum that Cyberport and Draper Dragon, which has Silicon Valley genes, have jointly established the "Hong Kong Cyberport Draper Dragon Web3.0 Accelerator". Through talent cultivation, project incubation, and investment in various dimensions, it connects the related industry development between Silicon Valley and Hong Kong, accelerating the practical application of Hong Kong's Web3.0 field.

Since its establishment, the Cyberport Investors Network (CIN) has a total investment of 2.597 billion Hong Kong dollars, an increase of more than 560 million Hong Kong dollars compared to last year, with an annual increase of 64%. This year, CIN has added 30 new investment units, with a total number of investment units exceeding 200, including investors from Mainland China and the Asia-Pacific region.

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Hong Kong's increase in technology is not only due to changes in Cyberport. Recently, Hong Kong's Chief Executive Li Jia Chao mentioned in his third policy report during his tenure that Hong Kong plans to establish a 10 billion Hong Kong dollar innovation and technology industry guidance fund. The significance of this fund is great. It not only provides key financial support for start-ups but also attracts social capital participation through government funding, forming a fund amplification effect. The market generally believes that this fund will provide support for the systematic construction of the innovation and technology industry ecosystem, attract more technology companies to Hong Kong, and thus promote industrial upgrading.

The chairman of Cyberport said in an interview with new media that Cyberport is currently under the Hong Kong Special Administrative Region Government, and its development blueprint is based on the implementation plan of the Hong Kong Special Administrative Region Government and the country. The most important thing is to develop the industry as the goal, and the biggest goal is to develop Hong Kong's Internet of Things, especially artificial intelligence. Last year, the establishment of Hong Kong's first artificial intelligence supercomputing center was initiated to solve the computing power required for the development of artificial intelligence. The first phase will be put into production in the second half of this year, and the Hong Kong Artificial Intelligence Supercomputing Center will be completed.

"The global investment environment this year, whether it is venture capital or fundraising, has some fluctuations. On the one hand, it is a problem of geopolitical issues; on the other hand, the economic volatility is relatively large, especially in the supply chain. Last year, VC investment in artificial intelligence was more active, but it has slowed down this year, so the overall investment environment is quite challenging, and it is also the case for Cyberport." Chen Ximing said.

He said that as a park of the Special Administrative Region Government, Cyberport is to cooperate with the Special Administrative Region Government to go out. In the past few years, Cyberport has attracted many well-known overseas and mainland companies, such as Huawei, iFLYTEK, and other companies to settle in, giving full play to Hong Kong's role as a "connector". In the future, allowing overseas companies to enter the mainland and allowing mainland companies to establish international headquarters in Hong Kong and go to the overseas market is also an important layout of Cyberport.

Establishing a 10 billion Hong Kong dollar mother fund to accelerate the application and landing of technology.

Affected by various factors, economic slowdown has become a problem that the world has to face, and the technology-related industry is expected by society because of the many possibilities it brings. "Digitalization" has long become the most familiar term in all walks of life, and industries such as information, communication, and semiconductors have also developed into hot investment targets. In terms of market value, among the top ten companies in the world, technology and communication-related companies occupy six seats, including Microsoft, Apple, NVIDIA, Google, Meta, TSMC, etc.At present, every region is accelerating the layout of technology-related industries. Some people liken the government to a huge VC (venture capital), hoping to identify innovations that can achieve large-scale application through widespread investment to fuel economic development. In China, accelerating the cultivation of new productive forces has become an important direction for development, with various fields such as industrial internet, autonomous driving, general large models, and niche small models flourishing in the mainland. Meanwhile, Hong Kong is also accelerating the development of the innovation and technology industry.

In the past, Hong Kong's main pillar industries were real estate and finance, but with changes in the environment and other factors, Hong Kong has begun to layout the technology industry. Not long ago, the Hong Kong Special Administrative Region announced plans to establish a 10 billion Hong Kong dollar innovation and technology industry guidance fund. This is another important measure following the establishment of the Hong Kong Innovation and Technology Venture Fund by the Hong Kong SAR government in 2018, as well as the release of the "Industry-University-Research 1+ Plan" and the "New Industrialization Funding Program."

The market generally believes that the emergence of this fund is of great significance to the development of Hong Kong's innovation and technology industry. Previously, Shenzhen has provided a model for the operation of a mother fund. Shenzhen's first angel guidance fund has invested in several unicorns over the past five years and has attracted a large number of fund management institutions, global funds, and projects to Shenzhen.

Xian Handi, chairman of the Cyberport Investor Network Planning Group, co-founder and vice chairman of China Mobile Game Technology Group Co., Ltd., and founding partner of Guohong Jiaxin Capital, analyzed to new media that the importance of Hong Kong's mother fund lies in its ability to attract social capital participation through government funding, forming a capital amplification effect. This not only provides key financial support for start-ups, promoting the rapid growth and development of enterprises, but also promotes industrial upgrading and economic development, enhances market confidence, and plays an important strategic role in promoting regional economic prosperity.

In addition to the investment of the Hong Kong government, as one of the important industrial parks in Hong Kong, Cyberport is also accelerating the promotion of industrial innovation in the internet, artificial intelligence, and biotechnology, investing in high-potential start-ups within the Cyberport ecosystem through its "Cyberport Investment and Entrepreneurship Fund."

Chen Xiaoming said that the total investment of Cyberport's investment and entrepreneurship fund, along with co-investment, has exceeded 1.94 billion Hong Kong dollars, with a capital attraction ratio of 1:9. To date, Cyberport has invested in 28 start-up projects and has cultivated and supported 8 unicorn enterprises. At the same time, in order to solve the dilemma of a huge gap in Hong Kong's computing power, Cyberport has built the largest artificial intelligence supercomputing center in Hong Kong, which will be put into use within the year. Currently, Cyberport has artificial intelligence, blockchain, and other sections, and the next step is to increase investment in financial technology and biotechnology.

It is worth noting that Hong Kong plays an important role in connecting the mainland and international markets. For mainland enterprises, Hong Kong provides an international window to help them promote businesses such as Web3.0 overseas and seek cooperation opportunities globally. For Hong Kong locals, despite challenges such as population size and industrial base, a series of policies introduced by the Hong Kong government still provide valuable financial and resource support for entrepreneurs, allowing technology to accelerate the application of landing.

In Chen Xiaoming's view, as an international financial and venture capital center, Hong Kong is in line with the international investment environment and hopes to accelerate the grasp of the investment environment through venture capital. Adhering to talent training, currently, 1/4 of the entrepreneurs in Cyberport are not from Hong Kong, but from overseas and the mainland, hoping that Hong Kong's advantage as an international center will attract more talent to join; according to the development requirements of the country's new productive forces, using technology to promote industrial development is also a key task. From the perspective of the SAR government, it is also considering how to subsidize, especially to help small and medium-sized enterprises with digital transformation.

Focus on investing in AI, Web3.0 industries to help mainland enterprises go global.It is worth noting that despite the vastness of the tech industry, for technology parks like Cyberport, there has been a clear focus on specific areas, namely artificial intelligence and Web3.0. The reason for choosing these two fields is partly due to their broad technological prospects, and partly because they are suitable for development in Hong Kong.

Chen Ximing stated that global economic uncertainty and supply chain stability issues have significantly impacted investment. Investors are more cautious in decision-making, preferring companies with stable cash flows, strong supply chain management capabilities, international perspectives, and cross-border cooperation abilities. In the first half of 2023, the artificial intelligence sector attracted a significant amount of venture capital (VC) investment. Although the market is gradually becoming saturated and competition is intensifying, artificial intelligence, as an important direction for future technological development, still has tremendous investment potential.

The Deputy Secretary for Financial Services and the Treasury (FSTB), Chan Ho Leung, believes that Hong Kong ranks third in the Global Financial Centers Index, with many financial institutions choosing to establish their regional headquarters or largest regional operations in the city. This means that Web3.0 companies can conveniently access a large number of potential customers, investors, and business partners here.

To connect the development of related industries in Silicon Valley and Hong Kong from multiple dimensions such as talent cultivation, project incubation, and investment, at the 2024 Cyberport Entrepreneurship Investment Forum, Cyberport and Draper Dragon jointly established the "Hong Kong Cyberport Draper Dragon Web3.0 Accelerator."

Draper Dragon's Managing Partner, Wang Yuehua, told new media reporters that Hong Kong plays an important role in the international technology and innovation hub, with unique geographical and political advantages, while Cyberport provides entrepreneurs with good opportunities in policy support and ecosystem construction. This year's joint establishment of the accelerator with Cyberport will select promising projects, which is of great significance for promoting foreign industry.

In Wang Yuehua's view, Web 3.0 is the next generation of the internet, emphasizing the ability to transfer value and allow users to control and manage their own data. Centralization is not absolute and should be applied flexibly according to specific scenarios. From a technical perspective, the application of decentralized identity (DID) and zero-knowledge proofs (ZK Proof) will become more widespread. They will provide safer and more efficient identity management and privacy protection solutions for the digital economy, promoting the continuous and healthy development of the digital economy and Web 3.0.

It should not be overlooked that Hong Kong's accelerated layout of AI and Web3.0 industries not only provides opportunities for local startups but also serves as a platform linking mainland China and overseas, providing mainland enterprises with a window. At this stage, due to regulatory and other factors, mainland China has many restrictions in the development of the Web3.0 field. Therefore, going overseas has become a necessary option for these companies.

The reporter noticed at the 2024 Cyberport Entrepreneurship Investment Forum that many mainland companies, including digital human production company Zhongying Nian Nian, digital asset content design company Traditionow, and Holmes AI, which provides computational support for the market, also participated in this year's Cyberport exhibition. Among them, Zhongying Nian Nian stated that it has chosen to settle in Cyberport.

The aforementioned companies all believe that laying out in Hong Kong is one of the important ways for them to achieve business expansion overseas. Zhongying Nian Nian stated that after the animation business has matured, they need to find a new business growth curve, and digital human technology can be widely applied in the Web3.0 field. Hong Kong is an ideal place for them to achieve technology implementation and expansion overseas.

Making the tech industry an important engine for Hong Kong's economic development.