WeLab, a Hong Kong-based online and mobile lending platform, has closed a $160M Series B funding round, setting a new record in the city’s dynamic startup sector. The fundraising was backed by a consortium of domestic and international investors including Khazanah Nasional Berhad, ING Bank and Guangdong Technology Financial Group. The timing is opportune since this round coincides with an ongoing week-long series of startup events organized by InvestHK, Hong Kong’s promotional agency. WebLab’s first $20 million Series A funding round in January 2015 was backed by Sequoia Capital China, DST Global, Ule and ICONIQ Capital.
Hong Kong is pushing to be branded as a hub for tech startups including fintech, biotech, data analytics and Internet of Things (IoT). This large fundraising round accentuates the attraction level of innovation models. Limited capital has been a major drawback for Hong Kong’s startups, despite the many high net worth individuals (HNWIs), and business and real estate moguls in the city.
Nevertheless, there has been noteworthy evolution in the city’s startup ecosystem over the past few years. Today, Hong Kong has 10 incubators and accelerators, 34 co-working spaces, and 1,500 startups, which is a 46 percent increase.
The Hong Kong government has also launched several initiatives towards promoting the budding startup ecosystem. It launched the Innovation and Technology Fund (ITF) of $250 million to support local tech startups. It recently launched the Innovation and Technology Bureau, which synchronizes R&D, science and innovation initiatives. It also manages the expansion of Hong Kong Science and Technology Park and Cyberport. In addition, $13 million has been allocated to facilitate a partnership with China’s state-affiliated engineering labs.
There are ongoing discussions on whether these government initiatives can lead to significant startup activities. The famed Silicon Valley was created by venture firms in Sand Hill Road, even though the model is changing with the increased crowd financing, angel investing and non-equity investing.
Singapore has been recycling government-led funds to develop its startup ecosystem although it has not yet been developed to reach substantial levels. India recently turned to government funding to boost its tech sector, and many new funds have already been raised to finance Indian small businesses.
Therefore, as Hong Kong also gets support from government initiatives and funds, such as this one of WeLab, lack of capital for startups may become something of the past.