This second edition study examines the development of Hong Kong’s start-up ecosystem.

  • 101 entrepreneurs, 292 university students and 9 Key Opinion Leaders (KOL) participated in 1Q 2019
  • It identifies the current state, strengths, gaps and provides 7 key recommendations
  • Hong Kong Entrepreneurship Development Index based on 10 contributing factors
  • Deep dive on Hong Kong’s priority innovation sectors Fintech, Biotech, Smart City and AI
  • Venture capital investment in Hong Kong-based start-ups examined for the previous 6 fiscal years
Hong Kong’s entrepreneurial landscape:the purpose vs. capability matrix
Overall entrepreneur and student perception of purpose and capability in the Hong Kong start-up landscape
Source: KPMG survey analysis

This year’s Transforming Hong Kong Through Entrepreneurship study finds that Hong Kong entrepreneurs are ambitious about the long-term growth prospects of their companies, are increasingly looking to expand their businesses outside of Hong Kong, and are making better use of available support services. However, growth may be constrained if support is not better targeted to the needs of start-ups as they progress from early to growth stage. In addition, more needs to be done to ensure that founders and those interested in working for start-ups receive sufficient support from family, friends and the general community.


More entrepreneurs surveyed agree Hong Kong is a dynamic and vibrant start-up location compared with last year, but additional targeted support for growth stage ventures and emerging sectors is needed

The study highlights differences in how entrepreneurs rated Hong Kong’s position as an innovation hub in key sectors. Respondents were more likely to consider Hong Kong as an innovation hub for the fintech sector compared to artificial intelligence, biotechnology or smart city, suggesting the latter sectors need more targeted support. More than two-thirds of entrepreneurs polled (67 percent) agree Hong Kong is well-positioned as a fintech innovation hub, compared with less than half who agree the same for the other three sectors.

Vibrancy of Hong Kong’s start-up ecosystem
Percentage of entrepreneurs who agree or strongly agree Hong Kong’s start-up landscape is dynamic and vibrant
Students’ top-ranked places to become an entrepreneur

Students rank Hong Kong as their most preferred place to start a business, but this may shift by 2025 as mainland China’s tech hubs continue to develop

Source: KPMG survey analysis
Note: respondents could select their top three choices; partial list shown
Entrepreneurs are ambitious about long-term sales growth and target markets, but results point to a gap in community support
Estimated breakdown of revenue sources by market
Source: KPMG survey analysis
Hong Kong’s competitive advantages are shifting, while cost of doing business remains a key challenge
Key challenges of doing business in Hong Kong

Percentage of entrepreneurs who selected each of the below responses as one of the top three challenges

Source: KPMG survey analysis
Note: partial list of responses shown

Start-ups expect to increase their use of formal funding sources, but more education is still needed to improve access to funding

Analysis of VC investment over the past six years highlights a 20-fold increase in capital directed at Hong Kong-based start-ups. Average deal size for private VC investments increased more than 35-fold within the same period. The findings suggest Hong Kong’s VC ecosystem is maturing and that priority innovation & technology focus areas including artificial intelligence, biotechnology, fintech and smart city azre gaining a greater proportion of the total capital invested.



Source: KPMG Survey Analysis
Note: respondents could choose all categories that apply. Data shows the percentage of respondents who use each funding source, not the value of funding. Reasons for not using private equity were not measured in the 2018 study.


Use of support services is increasing, but gaps in effectiveness pose a risk to future vibrancy as start-ups move from early stage to growth stage

Overall, entrepreneurs are making better use of support services, such as co-working spaces, pitching competitions and mentoring, compared with a year ago. However, the use and the effectiveness of these services tended to be higher for early-stage start-ups as compared to growth-stage and mature-stage, suggesting a need for differentiated services targeted to post- prototype stage companies.

Effectiveness of support services

Percentage of entrepreneurs saying services are effective or very effective


Source: KPMG survey analysis
Note: Usage = percentage of respondents who say they use these services.


The talent picture is improving for Hong Kong start-ups, but more should be done to cultivate local talent and develop an entrepreneurial mindset

Attracting, Motivating, Engaging And Retaining Quality Talent

Percentage of entrepreneurs who agree or strongly agree with the following statements

  • Expand offerings to support growth stage and mature stage start-ups
  • Prioritize formal funding sources
  • Utilise profit tax exemptions changes
  • Focus on research commercialization, technology transfer & open data
  • Leverage the Greater Bay Area as a talent pool
  • Build and lead people businesses
  • Communicate the irreplaceable value of start-ups