Public and private funding for startups in Hong Kong in 2024-2025
Hong Kong offers a range of government and private funding options to startups. They aim to help entrepreneurs get their businesses off the ground or expand in Hong Kong. Funding ranges from covering initial company registration and operating costs through to streamlining an existing business and even providing support for international exports. With the right information and resources, you can secure funding to set up your business for success.
This article will help you to recognise the types of funding available for both startups and expanding businesses, as well as offer some tips when it comes to securing startup funding in Hong Kong.
Public Funding for Startups in Hong Kong
The Hong Kong SAR government invests in businesses and startups with the aim of fostering innovation, job creation, and economic development. It does so by awarding economic incentives to businesses that meet certain criteria.
What types of government funding are available in Hong Kong?
The Hong Kong Government has allocated funds to support businesses in areas that will benefit the wider population. Industries such as Research and Development (R&D) and Fintech are widely subsidised, but we also find that specific activities within other industries are also publicly funded (such as marketing, hiring talent, and other economy-boosting or ‘anti-epidemic’ activities).
How can I find out what activities are funded?
Startmeup.hk is a good place to start, with information on available funding, incubators, accelerators and general guidance for an application. Along with InvestHK, the aim is to help businesses set up or expand to Hong Kong to assist with the economic development of the city. The information is also useful for research if a third party is assisting with an application
What are the types of government support schemes?
Grants: The government gives pre-allocated funds to pay for a business’s investments, such as infrastructure, marketing and technology. Grants can range from smaller amounts (maybe to upgrade IT systems) to larger investments (think research projects or an expansion into new ventures or markets).
An example of a grant is The Hong Kong Smart Traffic Fund. It provides financial assistance to public and private organizations to promote smart transportation infrastructure. It supports pre-approved categories that will improve the efficiency and safety of transportation, reduce traffic congestion, and improve air quality. The fund also encourages the use of new technologies, such as artificial intelligence and big data, to develop intelligent traffic solutions.
Tax incentive: This type of incentive allows businesses to deduct specific expenditures from their taxable income. With these economic incentives, the Hong Kong government hopes to stimulate economic growth while ensuring that local businesses are able to capitalise on new opportunities.
Enhanced Tax Deduction for R&D Expenditures: Tax incentives are important tools for encouraging innovation, and the Enhanced Tax Deduction for Research & Development Expenditures is one of them. This incentive allows businesses to deduct up to 300% of their research & development expenditures from their taxable income. Companies can use this incentive to invest in new technologies, products or services, giving them a competitive edge in the market. This deduction encourages businesses to invest in innovative projects and create jobs, contributing to economic growth and prosperity.
Tax breaks are also available for family offices.
Encouraging talent and hiring: If an individual meets certain criteria on their profile or if their expertise is listed on the Government Talent List, it could be easier for them to apply for a visa. This would save resources for all involved. More details on this can be found in this article. The above Anti-Epidemic fund also supports businesses in paying staff salaries to ease the burden on businesses struggling with COVID-19 economic effects.
Office space, equipment, and other resources: The Science and Technology Park and Cyberport offer a location and amenities that allow a business to operate, as well as additional funding. These are provided to businesses in the technology and creative sectors.
Exporting assistance for Hong Kong businesses: designed to promote a competitive edge in international markets and increase export sales.
The Export Marketing Fund (EMF) was established by the Hong Kong government to help Hong Kong businesses expand their export markets. The EMF provides financial support to exporters in the form of grants, loans and tax concessions, with the goal of helping them reach new global markets. This fund can be used for marketing activities such as market research, advertising and promotional campaigns, product development and customised trade shows.
Is new government funding available in 2024 and 2025?
The Hong Kong SAR Government Budget, which is announced in February every year, includes support for businesses. It details new schemes, expansion of schemes and industries the government would like to encourage through economic incentives. For a complete overview of the changes for the current year, read our Hong Kong 2024-25 Budget Overview.
Dedicated Fund On Branding, Upgrading And Domestic Sales (BUD Fund)
The BUD Fund, which has been active since June 2012, provides an incentive for Hong Kong businesses to invest in Mainland China, specifically by creating brands and upgrading their businesses to boost domestic sales in the Mainland.
The geographical and financial scope of the BUD Fund has steadily increased over the years. Today, it encompasses the territories of ASEAN member countries, as well as those with IPPAs. Since March 2024, the list of nations covered by the BUD Fund also includes Bahrain.
SMEs can take advantage of Easy BUD for simplified applications with a maximum funding of HK$100,000. For large enterprises, the cumulative funding limit is capped at HK$7,000,000 with a maximum of 70 projects.
Another change in the 2024-25 Budget is “E-commerce Easy.” The BUD Fund was injected with HK$500,000,000 and can provide up to HK$1,000,000 per enterprise that develops e-commerce projects in Mainland China.
Digital Transformation Support Pilot Programme (DTSPP)
The DTSPP is a new Programme intended for registered SMEs in the food & beverage and retail industries Starting this year, the Programme will help SMEs find easier funding solutions.
To be eligible for DTSPP funding, your company must have substantive operations in Hong Kong, and it must not be a listed company, statutory body, or non-governmental organisation financed through public funding.
The focus of the DTSPP is digital solutions with a promised 1:1 matching basis up to HK$50,000 for online promotions, digital payment systems, and customer management.
Private Funding
Can I get funding from another business or individual?
In addition to public funding, there are also a number of private funding options available to Hong Kong businesses. Some examples are:
Accelerators or venture capital firms: One example is Brinc, a Hong Kong-based accelerator that focuses on investment in startups.
Family offices: A private wealth management advisory firm that serves the financial and investment needs of an individual or family.
Your network: Building a network of relevant private investors
Check here for a list of possible private funders for your startup.
Fintech HK also lists investors and summarises how attractive the Hong Kong market is to investors; “Hong Kong currently ranks No. 1 on the world's IPO market, as well as for total IPO funds raised.”
Private and public funding
The Innovation and Technology Venture Fund (ITVF) encourages Venture Capital firms to invest in technology companies by making it more appealing for them to do so.
What about a bank loan?
A bank loan is another way to obtain financing. In order to apply, you’ll most likely need to prepare documents such as financial statements and business plans in detail to demonstrate the projected cash flow and ability to pay back a bank loan. Bank loans are more rigid in nature, and in general need to be guaranteed against an asset to ensure the loan will be repaid in the event a business fails.
The SME Financing Guarantee Scheme reduces some of these barriers to financing for small to medium-sized businesses. The scheme will guarantee loans from lending institutions by up to 90% to allow for easier financing through a bank. With the 2024-25 Budget, this has been extended to March 2026. The guaranteed commitment under the scheme has been increased by HK$10 billion.
Applying for funding
As you might imagine, an application for a government funding scheme requires detailed information and supporting resources. Consult with someone experienced with funding applications to ensure that the appropriate language is used and all ‘boxes’ are ticked. Startmeup.hk offers guidance on the appropriate funds and the application process, and each of the funds offer their own instructions on how to apply.
Working with a provider who has experience in writing applications can help you craft an effective application that captures the attention of your reader while saving you time and energy.
Company Registration and Other Requirements
Before applying, Hong Kong businesses also need to meet the various other requirements for starting and running a business in the city. These include company registration, business licences, and business formation and incorporation. Shepherd Asia can assist with many parts of the application process and ensure your company can demonstrate its eligibility for a given funding option.
Contact us to help you find the right funding option
Hong Kong is a great place to start a business, with a wide variety of funding options available, both from the government and private investors. While finding the right funding option can be challenging, there are many resources available to help businesses navigate the process, including directories of available grants and other services that can help with company registration and other requirements. If you're thinking about starting a business in Hong Kong, we encourage you to contact us to learn more about the funding options available and how we can help you navigate the process.
Is Government funding right for you?
