Cyberport Professional Services Network: Consultation with Start-ups
As a Cyberport Professional Services Network partner, CW CPA was invited by Hong Kong Cyberport to join a clinic event on 31 March 2021. We had in-depth consultation discussions with start-ups to analyze their business model and brainstorm opportunities in Hong Kong during the event.
Our CW team members in Hong Kong and mainland China, together with our invited business partner from Hewlett Rand, physically and virtually provided professional advice and insights on the Hong Kong market.
Kickstarting a company can be both exciting and challenging when entering a new market. Insufficient knowledge of the local market and its audience can pose as a severe obstacle. Due to the significant difference in consumer behavior between Hong Kong and the start-ups’ headquarters, we provided our insider knowledge of the Hong Kong and mainland China markets. Customization of products, services, marketing, and communication strategies based on the local market is crucial. Likewise, understanding the local market and the local audience is the first step to developing customer satisfaction.
Financing a start-up can also be challenging. Finding investors, pitching business ideas, and attracting investment are far from easy. Our team advised the start-ups to understand their business model’s benefits, unique selling points, and whether they relieve customer pain points. The notion of “demand creates supply” means that despite all odds, the success of any company lies in its service or product uniqueness – How does your product or service differentiate from existing competitors? What makes it attractive for investors and customers to spend time and money?
The overall thought-provoking discussions allowed the start-ups to think in their customers’ shoes where we also provided experience and industry knowledge for them to understand how to reach their business goals.
If you are a start-up company and interested in a one-to-one consultation, please contact:
Ms. Connie Pak
Written by Abigail Casino, Company Secretarial Department and Owen Wang, Latin Department, CW CPA
Ecuador: Laws and Regulatory Changes for Entrepreneurs and Startups
Article presented by the firm of auditors and business consultants Audit Corporate and Tax Corporate, Member of Allinial Global
Contact Email: Diego Zambrano
The entrepreneurship law and regulatory changes in 2020 correspond to the creation and management of companies in various industries in Ecuador. Details of changes shall be in force in 2021, which led to noticeable results.
Organic Law of Entrepreneurship and Innovation
The Official Gazette Supplement No. 151, published on 28 February 2020 (Friday), focused on the Organic Law of Entrepreneurship and Innovation. A summary of the main aspects addressed by the standard includes:
- Creation of Simplified Stock Companies (SAS);
- Companies of Benefit and Collective Interest
At the time of adopting the status of a company of benefit and collective interest, a company is obliged to create a positive material impact on society and the environment, where an annual report is presented to the management;
- The definition of “entrepreneur” is provided, and the government entities are established to disseminate the procedures and applicable rates for entrepreneurs;
- It is arranged to develop work and contractual modalities to be implemented in entrepreneurial work, including part-time, legal benefits and others;
- Regulatory frameworks are established for crowdfunding, and other platforms in their different products, such as donations, pre-purchase, investment in shares, reimbursable financing;
- Limited companies are allowed to subsist with a single shareholder;
- The joint-stock company and the limited liability company may subsist with a single shareholder/partner. For its constitution, at least two contracting parties must participate;
- The existence of the position of the commissioner becomes optional. In accordance with the provisions of the statutes, Public limited companies may or may not have commissioners as an oversight body;
- A company will incur cause of dissolution due to losses, when these represent 60% or more of the equity and that this situation is maintained for more than 5 continuous years;
- In companies whose bylaws provide for the existence of a Board of Directors, the Legal Representative of the company may not be president or representative of that collegiate body;
- It is allowed that the financial statements presented to the tax authority are not presented to the Superintendency of Securities and Insurance Companies;
- Holding general meetings through telematic means is allowed;
- It is allowed to carry out capital increases under the compensation of credits, rights of attribution and absorption of losses; When a company registers operational losses and has reserves, these will be eliminated automatically;
- Voluntary and early dissolution does not require prior authorization from the Superintendency of Companies, Securities and Insurance. Therefore, the direct registration of that corporate act in the Mercantile Registry is allowed for the beginning of the liquidation that will be supervised by the control body. The change of name, change of address and modification of the company term do not require prior authorization either;
Less than 50% of the instruments proposed by the regulation to promote the creation of businesses in the country are operational. The Law defined the creation of new types of credit and companies, among others, but only the latter has been effectively operationalized with the creation of firms through Simplified Stock Companies (SAS).
From May 2020 to February 2021, more than 5,000 companies of this type were registered. Another benefit that the norm raises is to generate an employment contract that implies fewer costs for entrepreneurs, this type of instrument was generated last year through new work modalities with durations of only one year, with the cancellation of the eviction.
CW Co-organized a Webinar with ELLALAN
To stand out and bring in businesses in the digital age, it is all about innovation and creating an impressive contact scope on the internet. CW had co-organized a webinar with Ellalan (https://www.ellalan.com/) on 26 January 2021. Topics include:
- Fundraising terms related to financial returns: pre-money/post-money valuation, anti-dilution, lock-up provision
- Intellectual property rights protection: trademarks, designs, goodwill, social media accounts
- Adopting cloud accounting: recognition of bank flows and generation of corresponding vouchers (accounting); direct information collection; reduction of internal control risks and prevention of fraudulent records
Written by Delilah Li, China Consultancy Team, CW CPA
Funding Support For Startups in Hong Kong
As an international financial center, Hong Kong has not only experiencing the typical business, but also a booming startup scene in recent years. In the 2019 Global Startup Ecosystem Report, Hong Kong is rated as a new entrant in the world’s top 25 startup hubs, listed as the third most innovative location in South East Asia, East Asia, and Oceania in the Global Innovation Index 2019. Furthermore, according to lnvestHK’s 2019 startup survey:
- Hong Kong has a significant increase over 2018 on all main parameters, with a total of 3,184 startups (+21 %) employing 12,478 employees (+31 %) across 92 co-work spaces, incubators, and accelerators.
- The group of multi-cultural startup founders, who are the backbone of Hong Kong’s startup ecosystem, continues to create job opportunities for the Hong Kong economy.
- The number of co-work spaces, incubators, and accelerators, which is supported by a robust network of ecosystem builders and stakeholders, has also shown remarkable growth over the years.
WHAT DO OVERSEAS STARTUPS NEED TO KNOW ABOUT FUNDING PROGRAMS IN HONG KONG?
The Hong Kong government and different stakeholders participate actively in the startup ecosystem, which offers more than 70 different programs to support potential entrepreneurs with different goals and needs. In this article, we aim at listing some interesting programs that you should know about.
In recent years, the Government of Hong Kong has forged ahead with the development of innovation and technology with plentiful funding schemes.
Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD) Fund
Provide funding support to individual Hong Kong enterprises in undertaking projects to develop brands, upgrade and restructure their business operations and promote sales in the FTA markets 3 and Mainland China market, so as to enhance their competitiveness and facilitate their business development in the FTA markets and Mainland China market.
Partnership Research Programme (PRP)
Launched in January 2019, PRP aims to support applied research and development (R&D) projects undertaken by R&D Centres or designated local public research institutes in collaboration with private companies.
Enterprise Support Scheme (ESS)
Launched in 2015, ESS aims to provide funding support for local companies to conduct in-house research and development (R&D) work with a view to encouraging the private sector to invest in R&D.
Technology Voucher Programme (TVP)
TVP subsidise local enterprises and organisations to use technological services and solutions to improve productivity, or upgrade or transform their business processes. TVP invites applications for funding all year round.
Reindustrialisation and Technology Training Programme (RTTP)
Reindustrialisation and Technology Training Programme (RTTP) is a funding scheme under the Innovation and Technology Fund that subsidises local companies on a 2:1 matching basis to train their staff in advanced technologies, especially those related to “Industry 4.0”.
Incubation and acceleration programs
Cyberport Incubation Program
Cyberport Incubation Programme supports entrepreneurs and start-ups with resources that aim to accelerate their growth. In addition to a range of business and professional services, incubatees get up to HK$500,000 support over 24 months.
Cyberport Accelerator Support Programme
The Cyberport Accelerator Support Programme prepares Cyberport incubatees and alumni for international markets and investors, providing up to HK$300,000 financial assistance to each successful applicant.
Cyberport Macro Fund
With an initial size of HK$200M, the Cyberport Macro Fund is set in place to provide seed to Series A stage funding to Cyberport digital entrepreneurs to assist them to accelerate; and promote the development of the venture capital ecosystem for digital entrepreneurs in Hong Kong.
Incu-Tech Incubation Programme
Incu-Tech helps technology startups kickstart their journey to productize its R&D outcomes, explore the market and scale their businesses. The 3-year programme offers comprehensive services including R&D support, mentorship, investor matching and more.
Incu-Bio Incubation Programme
A four-year programme managed by the Biomedical Technology Cluster, Incu-Bio supports the development of biomedical tech startups in Hong Kong. Connect with stakeholders in investment and regulatory support to devise the perfect business plan. Access cutting-edge equipment, co-working space and lab services. Cover R&D costs with financial support up to HK$6,000,000.
Incu-App Incubation Programme
Incu-App is a two-year programme designed to help startups develop new solutions from existing technology. We provide designated account managers who can give you professional guidance, so you can tap into industry expertise in content development, application platform and market support value chains through partnerships with top companies in Hong Kong.
Corporate Venture Fund (CVF)
The Corporate Venture Fund (CVF) gives early-stage Hong Kong technology startups a chance to fully develop their ideas and create revolutionary new tech products and services.
Besides looking for funding opportunities, overseas startups should also pay close attention to the abundant startup network, marketing campaigns, competitions and matchmaking events organized by an extensive network of stakeholders in the startup ecosystem. A good way to keep track of Hong Kong’s startup events is to visit the Events section on InvestHK’s startmeup.hk website: https://www.startmeup.hk/upcoming-events/events-calendar/
CW STARTUP SERVICE PACKAGE
The unique status of Hong Kong in the international community, the increasingly close co-operation between Hong Kong and the Mainland, and the financial support from various sectors of the society have all contributed to the startup development of Hong Kong.
Despite the fact that Hong Kong has been battered by social movements and epidemics, CW believes that it is precisely during uncertain times new forms of business start to sprout.
While our future relies on innovation and new business models, it is equally important for business advisory firms like CW to learn how to support startups to grow in a healthy and compliant manner. Last month, CW joined Cyberport Hong Kong, Brazil-China Chamber of Commerce and Invest Hong Kong in the promotion of Cyberport Venture Capital Forum (CVCF) which took place during 3-4 November. According to the post-event report, more than 250 deal flows arranged during CVCF. Startups received ample opportunities to meet with investors and showcase their solutions.
If you are ready to take advantage of the funding opportunities in Hong Kong to expand into Asia, CW offers an attractive service package to help you:
- Setting up a limited company in Hong Kong
- Taking care of your annual accounting and tax compliance
- Connecting you directly to our startup ecosystem partners
ACCESS OUR STARTUP SERVICE PACKAGE IN THREE DIFFERENT LANGUAGES
- Government Funding Schemes at a Glance https://www.success.tid.gov.hk/success_enews/govfundscheme/eng.pdf
- Startup Resources https://www.startmeup.hk/startup-resources/
- Trade and Industry Department, HKSAR, Resources Corner, Financing https://www.success.tid.gov.hk/english/res_cor/res_cor.html#T3
In late April, CW had the pleasure to deliver a series of webinars in Mexico, sharing insights, experience and knowledge on how to overcome business challenges during COVID-19. With more than 100 people registered for the webinars and many more watching the video recordings, these webinars resulted from the collaborative efforts with our strategic business partners such as InvestHK and COMCE Sur.
COVID-19 landed in Latin America on 26 February 2020 when Brazil confirmed its first case. Mexico confirmed its very first case on 28 February in Mexico City. Since then, governments across the region – including Mexico – have taken an array of actions to protect their citizens and reduce the spread of COVID-19.
With the new coronavirus spreading rapidly across all Latin American countries, the seeming difficulty to stop the spread of coronavirus and the travel restrictions imposed by some governments in the region, it is difficult for LATAM businesses to successfully stay afloat in these times.
In the next coming months, our Latin Department will continue organizing more webinars on various topics relating to the latest government measures in battling against COVID-19 and helping our clients in Latin America steer clear of any policy uncertainty.
- InvestHK is a government department of foreign direct investment in Hong Kong, having a vision to strengthen Hong Kong’s status as the leading international business location in Asia. Its mission is to attract and retain foreign direct investment which is of strategic importance to the economic development of Hong Kong.
- COMCE is one of the main organizations dedicated to promoting foreign trade, foreign investment and the development of technology in Mexico. It has more than 50 years of experience in foreign trade promotion and represents around 2,000 exporting companies which carry out approximately 80% of total exports in Mexico.
Written by Victor Manuel Herrera, Latin Department, CW CPA