Hong Kong has largely failed in its quest to become a serious startup hub.

There was never really any competition with Shenzhen (or Hangzhou or Shanghai even). In our race against Singapore, we've also definitely lost. Singapore is a serious hub for SEA/Indonesia/Malaysia facing startups, with Gojek taking off. Meanwhile, Hong Kong is left in the dust.

We fail to keep our unicorns and decacorns. Our unicorns are not based here due to the city's capital or ability, but rather as a weird quirk of their founder's travelling history. Worst of all, we routinely chew up and drag down future, possible unicorns.

Overview of why we failed

Let's talk about why we've failed, despite our best attempts.
I've based my thinking here on a combination of Paul Graham's essays, The Startup Nation (about Israel), a collection of VC writing from nfx and GoingVC.

Startup hub = idea + talent + support + capital + execution

Idea

It stands to reason, that great startups need great ideas. These disruptive startups will usually hinge around a disruptive new idea - or they'd already be executed, which in turn would threaten that unicorn potential.

Yet, Hong Kong is not particularly supportive of new ideas. Our education system, modelled after a colonial system doesn't reward innovation. Students get punished for being bullied. Additionally, no one really comes to Hong Kong to get inspired. We're boringly corporate.

Talent

We don't have enough STEM talent, and people still undervalue it. How can we build a startup hub, with no real hackers?

On the operations/biz dev side, we have a bunch of people that build off of experience of running conglomerates. The process is no where close to near what running a startup should be like.

On the investing side, we have a supremely developed private equity industry. But few seem to realise that PE and early stage VC are quite different.

Early stage VC is key here because for something to be a startup hub, it had to attract, develop and keep great startups. This requires early stage VCs, who can see past the uncertainties and issue to the vision that startups present them, and see how it can be worth billions.

A PE/Growth Stage VC doesn't do this - they look at the operating data to make decisions. Thus, they can't advise or help startups get started.

So without seed funding, people go elsewhere to get funded and build. The ecosystem collapses.

The problem is compounded in Hong Kong. We have a lack of early stage VC talent, and an abundance of ego (or ignorance). Instead of realising a gap in seed/pre-seed funding, we send PE professionals to sit in on government funding schemes and act as gatekeepers.

This gatekeeping is made even worse with the hierarchy in HK. Those who would have founded great unicorns are blocked out and discouraged by the words of these successful investors. The system rewards people who produce middling results, not unicorns.

Support

This issue is repeated with the support for startups HK provides.