Business Angel and Startup Finance - Investing in Hong Kong - Part 3 Profiles and Networks

By John Lo, Partner, Corporate, King & Wood, Hong Kong

Editor's note – This series of articles explains the opportunities for business angel investment in Hong Kong. Part 1 Introduction – introduces angel investment in Hong Kong. Part 2 discusses the startup scene in Hong Kong, Part 3 outlines the profiles of business angels and networks, Part 4 describes financial infrastructure, Part 5 covers Government technology policies, Part 6 presents recent examples of success stories in the tech sector.

To a large extent, angel investment in Hong Kong has so far revolved around individual investors rather than institutions. It is useful to examine local angel financing activities by looking at the angel profiles.To date, no systematic research has been conducted regarding the number or makeup of business angels in Hong Kong. General observations indicate that the following groups, not in any order, have been spearheading the efforts: (a) former VC practitioners; (b) individuals who have made money from entrepreneurial activities or as angels; (c) second generation of the leading business families; (d) professionals such as lawyers, doctors and accountants; (e) tech executives and professionals; (f) well-to-do manufacturers who made their initial fortunes with investments in China; and (g) returnees or overseas Chinese with exposure to angel investment elsewhere.

Angel Profiles

A recent article on Hong Kong's VC industry has an interesting analysis of angel investors in Hong Kong. It put them into five categories :

Sophisticated – the "true" and knowledgeable angel investment practitioners; Businessmen – knowledgeable but less intense investors in start-ups doing deals as an alternative investment form; Corporate – manufacturers seeking tech startups to extend their product lines or services; Incidental – highly wealthy individuals investing to prove themselves or kill time; and Traditional entrepreneurs – traditionally minded bosses who will invest only if they are in control, not the founders who came up with the original ideas. Outside certain portions of the above circles, the concept of angel financing is only beginning to be understood or practiced widely.

Angel Networks

Angels acting in concert or in organized groups is a more effective way to invest. Accordingly, organized angel networks have begun to emerge in recent years. We cite a few better known examples below.

British Chamber of Commerce Business Angel Programme...

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