The Unicorn Hunt

“Founding a company is hard. Most of it isn’t smooth. You’ll have to make very hard decisions. You have to fire a few people. Therefore, if you don’t believe in your mission, giving up is easy. The majority of founders give up. But the best founders don’t give up.” – Mark Zuckerberg

My very first investment into an early stage tech startup was back in the summer of 2010. Tesla had just gone public, Facebook and Twitter were both on fire and approaching frothy late stage pre-IPO valuations and like many investors who had been burned by the global financial crisis just two years earlier, I was dying to get involved.  I hastily wrote my first cheque, not having a clue of what I was doing, and changed my LinkedIn title to a cringe-worthy “Angel Investor”…

Being based in Hong Kong the first place I naturally looked to quench my startup thirst was local. Unfortunately, the ecosystem in Hong Kong was all but non-existent at the time. The government was desperately trying to grow a very nascent environment via InvestHK and Cyberport but every vertical remained extremely siloed. I wasted no time and went straight to Silicon Valley to begin my startup education, writing off Hong Kong in the process altogether.

Fast forward eight years to present day and any newcomer or visitor to the city would be shocked to hear that Hong Kong ever lacked a startup scene, to begin with. The community is enormous now with hundreds of advocates all over the city working together. The entrepreneurial buzz and excitement felt today is palpable. Not a day goes by where I don’t receive some sort of invitation email to a startup event held in the city. This is truly an exciting time for Hong Kong.

The initial seeds of the ecosystem were planted in 2013 by InvestHK (a branch of the Hong Kong Government) when they introduced the StartmeupHK initiative which was “aimed at helping founders of innovative and scalable startups from overseas to set up or expand in Hong Kong.” The initial program was run as a contest, with applicants around the world vying for a coveted government endorsement to set up their business in Hong Kong.

But the true benefit of the StartmeupHK Initiative came in the form of investor education. What do I mean by this?  The dirty secret about early-stage investing here is that it was never seen as a traditional asset class to most investors in Hong Kong. Why? Well, the reason is simple. They (the wealthy investors) never had to consider it as one because nearly all the wealth in Hong Kong was made off of just one single asset class: real estate.

Over the last three generations in Hong Kong, real estate has been the single largest source of wealth creation for the people of Hong Kong, and Asians tend to be pretty close-minded when it comes to expanding their horizons. It’s a classic case of “if it ain’t broke, don’t fix it” and because of this nuance of the local market, investors have never really had to look outside of real estate (and a bit of Hong Kong equities since they like to gamble) to make their returns.

This is where the investor education component comes in. As asset prices continue to trend upward across the board, it is evident that the younger generations are unlikely to see the same magnitude of wealth creation from property that the older generations had by simply buying and holding apartments. This puts the younger generation in quite a dilemma as to where to find yield and make their money. The silver lining, of course, is that the younger generations also tend to be more open-minded and receptive to early-stage investing as an asset class.  

In the last 5 years since 2013, the Hong Kong startup ecosystem has literally exploded. Every week there are no fewer than a dozen conferences, meetups, networking events or panels being hosted at various locations around the city.

So what does Hong Kong need to truly become a global player in the world of rapidly emerging startup hubs? Competition is fierce which means Hong Kong needs to be aggressive.

First and foremost, as we mentioned above, is investor education. As a city whose wealth has largely been built on property investments, early-stage investing has never been seen as a viable asset class. This mentality is slowly changing as the second and third generations of traditional Hong Kong SMEs rise through the ranks of their family hierarchy. The latest generation knows full well the importance of technology and startups in our world so it will only be a matter of time before the financial support follows suit.

The second thing Hong Kong desperately needs is more Unicorn exits. Unicorns always put startup ecosystems on the map globally. We saw that happen in Israel after Google bought Waze. Despite Israel being known as the “Startup Nation” no one actually gave them the attention they deserved until that exit. Hong Kong needs more of the same. More exits will produce more wealthy entrepreneurs who in turn are more sympathetic towards startup founders and willing to re-invest their earned capital back into the ecosystem which helps the virtuous circle gain momentum.

Finally, for Hong Kong to truly succeed, the city needs to play to its strengths. This includes its proximity to China, it’s strength in the supply chain, logistics, and finance. Hong Kong remains one of the top three financial centers of the world and has the real opportunity to become a top three global startup and fintech hub.

For serious early stage investors, the unicorn hunt never ends. It’s a continual process of researching, networking, screening and connecting that eventually leads you to great startup investments.


This coming weekend I’ll be continuing that hunt in Sydney, Australia at the largest startup and growth conference in the region called StartCon,  My company Explorer Equity Group will be meeting with companies and looking for potential investments for our fund.  Both my partner Kyle Ellicott and I will be keynoting about Emerging Tech in Asia.

If you are in the area or are interested in flying in for the conference I have a very limited number of FREE conference tickets for my subscribers ($499 value, first come first served, just hit reply to this email). We’ll also be hosting a VIP dinner on Friday night with a small group of high profile investors, entrepreneurs, and Silicon Valley VCs. If you’d like to join us you can find all the details here.