Venture capital firms are all flocking to Hong Kong to poach talents.

"The number of VCs coming to Hong Kong to scout projects this year is noticeably higher than before," a doctoral student at a Hong Kong university recently told me. This year, investment institutions have been reaching out to their lab almost every one or two weeks, inquiring whether the research team has any plans to start a business.

For a very long time, in China's venture capital landscape, Hong Kong has barely had a presence in the tech entrepreneurship space beyond serving as a listing destination. It was even once regarded as a "startup desert," with some describing that "in Hong Kong, entrepreneurship is a high-risk activity, with a 'failure' rate as high as 99%."

This perception is now being overturned. We've noticed that recent financing announcements have seen a growing number of news about Hong Kong scholars raising funds for their startups. For example, Prof. KONG Lingpeng from the Department of Computer Science of the University of Hong Kong has officially embarked on his entrepreneurial journey, with Matrix Partners and Shunwei Capital participating in the investment; Embodied AI firm SourceNova Future, founded by LI Hongyang, an assistant professor at the University of Hong Kong, has secured hundreds of millions of RMB in a seed round, with top-tier institutions including ZhenFund, Gaorong Capital, IDG Capital, and 5Y Capital all joining in...

An investor told me, a group of VCs from Beijing, Shanghai, and Shenzhen have been frequently spotted in the laboratories of universities such as the University of Hong Kong, the Chinese University of Hong Kong, and the Hong Kong University of Science and Technology. Many senior professors and research group leaders have gathered a cohort of outstanding students around them, forming what can be likened to a "startup factory" that continuously produces entrepreneurial projects.

Many investors even directly approach research group leaders to ask if team members have any intention of starting a business. "It's increasingly common in Hong Kong to see a single professor mentor five or six students who each go on to launch their own ventures," a Hong Kong-based doctoral entrepreneur working in AI pharmaceuticals told me.

Although Hong Kong is home to multiple world-class universities and its scientific research strength has long ranked among the top globally, the commercialization of research results has not been very active for a long period. Data shows that as early as 2015, the scale of the venture capital market in Shenzhen had already surpassed that of Hong Kong. The main reason lies in the limited capacity of local industries to absorb research outputs and the relative lack of R&D application scenarios. Many professors from Hong Kong's universities have had to travel to Shenzhen to find partner enterprises and research topics. The most typical example is DJI, which, despite its strong Hong Kong roots, eventually grew into a global drone leader in Shenzhen.

It was also in that year that the Hong Kong Special Administrative Region government began to systematically ramp up its innovation and entrepreneurship policies. It successively established the Innovation and Technology Bureau, and set up the HK$2 billion "Innovation and Technology Venture Fund" and the HK$500 million "Innovation and Technology Living Fund," aiming to fill the capital and industry gaps in the innovation ecosystem. Since then, Hong Kong has embarked on a tech innovation drive that has continued for nearly a decade to this day.

An entrepreneur based in Hong Kong told me that Hong Kong has rolled out almost every conceivable support measure.

In 2022, the Hong Kong government put forward the slogan "No Innovation and Technology, No Future," elevating technological innovation to the core strategy for Hong Kong's future development. In the same year, the Hong Kong Investment Corporation, with a managed scale of HK$62 billion, was established, hoping to use "patient capital" to drive the development of Hong Kong's emerging industries. This year, Hong Kong further introduced a new round of policy packages. The 2026–2027 Budget proposes to set up a HK$10 billion Innovation and Technology Industry Guiding Fund; the new Capital Investment Entrant Scheme portfolio managed by the Hong Kong Investment Corporation will be no less than HK$3 billion; the Pilot Technology Innovation Accelerator Programme will provide funding of up to HK$30 million to entrepreneurship service providers at a 1:2 matching ratio, further improving the support system spanning from scientific research, incubation to industrialization.

An entrepreneur believes that as an international financial center, Hong Kong has abundant capital, but the funds allocated to early-stage tech projects are relatively limited. "Local Hong Kong capital is not very willing to invest in high-risk projects, but early-stage entrepreneurship exactly needs this kind of financial support the most."

Some analysts pointed out that one important reason why Hong Kong's tech venture capital scale has long been small is the limited number of LPs keen on tech investment. Although Hong Kong is flush with capital, a large amount of funds have long flowed to traditional assets such as real estate, failing to foster a venture capital culture that encourages risk-taking. At the same time, the lack of successful tech venture investment cases has further weakened the willingness of local capital to allocate resources to technological innovation, creating a vicious cycle to some extent.

The real turning point came in the past two years.

On one hand, new-generation AI technologies such as large models have begun to enter the stage of industrial implementation. After one or two years of technological accumulation, AI has rapidly penetrated into vertical fields including robotics, autonomous driving, biopharmaceuticals, and new materials, spawning a large number of new entrepreneurial opportunities. More and more scholars who originally focused on basic research have begun to see a window for technology commercialization.

On the other hand, the innovation infrastructure that has been continuously invested in over the past decade has also entered a period of concentrated release. The AI wave has pressed the "start button," accelerating the flow of Hong Kong's long-accumulated scientific research resources to industries. Since the beginning of this year, a growing number of Hong Kong professors active on the international AI academic stage have started to step out of their labs, set up companies, and raise funds for their startups.

Since last year, many mainland primary market VC/PE institutions have included Hong Kong in their priority layout lists: some have applied for Hong Kong licenses, some are conducting intensive project inspections, some are setting up funds, and others are preparing to establish Hong Kong subsidiaries.

Looking at the moves of top VCs this year, in May, Futu Capital under Shanghai State-owned Assets registered a wholly-owned subsidiary Futu International in Hong Kong; Chenyi Fund opened its Hong Kong office within the year and launched a new US dollar fund; a little earlier, CAS Star partnered with the University of Hong Kong to set up a venture capital fund. It is introduced that the fund will focus on future industries and global disruptive technologies, with a key focus on investing in technology transformation projects from Hong Kong universities and overseas scientific research institutions, as well as global hard tech enterprises founded by Chinese teams amid the AI wave, to accelerate the industrialization of scientific research results.

However, even as capital flocks in, entrepreneurs do not necessarily accept all offers.

In my conversations with entrepreneurs, one statement left a deep impression on me: most of them generally believe that compared with local Hong Kong investment institutions, mainland VCs have a higher tolerance for cutting-edge technologies and are more willing to bet on the technology itself; while local Hong Kong institutions are relatively more cautious. While technology is undoubtedly important, commercialization capabilities, customer validation, and revenue growth are often the key factors that truly determine whether an investment is made. For many AI startups that are still in the technology validation stage, this represents two completely different investment logics.

An entrepreneur told me that when choosing investors, the first thing they look at is not the valuation, but whether the other party truly understands the technology. "Some institutions have abundant resources, but they don't understand our research direction, and after communicating with them, they can't grasp the core issues." Compared to capital, they hope to find investors who can accompany their R&D efforts for the long term. "We hope that after starting our business, we can still adhere to our own technical roadmap, instead of being required to rush into commercialization immediately after raising financing."

During the 2025 Hong Kong FinTech Week, Prof. CHANG Tsz-kin, Chair Professor of Soft Materials and Devices at the Hong Kong Polytechnic University, stated that most hard tech startups are composed of university professors and researchers. While their technologies are leading, they generally lack market experience and operational capabilities. An ideal venture capital institution should help the team build an organization with commercial implementation capabilities, connect upstream and downstream industrial chains and government resources, and form a "technology + market" two-wheel drive model for the transformation of scientific research results.

In his view, venture capital can empower startups in at least two aspects.

The first is talent support. Most startup teams are composed of university professors, postdoctoral fellows, and students. They have a strong scientific research background but limited understanding of the market and commercialization paths. Therefore, talents with industrial experience are needed to assist in team formation and improve organizational capabilities.

The second is industrial resource docking. Hard tech entrepreneurship cannot do without upstream and downstream enterprises, application scenarios, and government resources, which are exactly the important value that mature investment institutions can provide. At present, Hong Kong's venture capital ecosystem is still in the development stage, and there is a certain gap compared with mature innovation cities such as Shenzhen, Beijing, and Shanghai. In the future, Hong Kong and the mainland may further strengthen exchanges and cooperation, jointly explore a venture capital mechanism more suitable for the transformation of hard tech achievements and entrepreneurial development of Hong Kong universities, so that more and more scientific research results from laboratories can truly move towards the industry.

This article is from WeChat official account "ChinaVenture", author: WEI Xianghui, published with authorization from 36Kr.