Written by: Carl
Editor: Marco
In recent years, Chinese entrepreneurs in the Web3.0 field have been self-deprecatingly calling themselves "wanderers". They have continued to go overseas in the face of rounds of policy pressure, including to Singapore, Dubai, the United States, Southeast Asia, and Central Asia.
Hong Kong’s policy declaration on the development of virtual assets has given many entrepreneurs hope for a return, and starting a business in Hong Kong has become the first choice for Chinese Web3.0 entrepreneurs.
"Almost all Web3.0 entrepreneurs in mainland China are eyeing Hong Kong. There is a trend now that entrepreneurs are gathering in Shenzhen from all over the country," a Web3.0 entrepreneur told Techub News.
Another entrepreneur said that there are at least a dozen Web3.0 projects being implemented in Hong Kong.
There are also various problems with Hong Kong's Web3.0 policies and implementation. Some people say it is difficult to open an account, while others think the cost is too high.
Going to Hong Kong, although the future is still uncertain, innovation or entrepreneurship has always been like this - sowing seeds in places where there is hope.
Millions of dollars in funding, close to angel round investment
READ2N co-founder Jeff expressed great satisfaction with the services provided by the Hong Kong Cyberport Web3.0 Base.
Recently, Jeff obtained an office in the Web3.0 base of Hong Kong Cyberport, which also has a "shared gym, tea room, living room, etc., where you can move in with just your luggage."
According to Jeff, READ2N is committed to using blockchain and AI technology to help literary works spread better around the world. It has published more than 90 literary works from nearly 10 countries and translated them into 10 languages through AI technology. It currently has 50,000 registered users and 4,000 daily active users.
READ2N was founded in Singapore at the end of 2022. Under the influence of the Web3.0 boom in Hong Kong this year, it decided to move to Hong Kong.
In January 2023, the Hong Kong Cyberport Web3.0 Base was officially established. When Hong Kong's Financial Secretary Paul Chan released the 2023-2024 budget, he stated that he would allocate HK$50 million to accelerate the development of the Web3.0 ecosystem.
Chan Mo-po said on June 18 that since the establishment of the Cyberport Web3.0 Base, there are now more than 150 Web3.0 companies settled in Cyberport. Currently, companies settled in Cyberport include cryptocurrency exchange Hashkey Group, Web3.0 game developer Animoca Brands, Ethereum software company Consensys of crypto wallet MetaMask and other well-known companies.
Earlier this year, READ2N applied for the Hong Kong Cyberport incubation program. Jeff said, “There is no threshold for registration, but you have to go through multiple rounds of screening and interviews and roadshows. There are many projects involved, almost all of which are Chinese start-up projects. The final admission rate is about 5%.”
READ2N passed the interview and successfully settled in Hong Kong Cyberport. In addition to venue support, READ2N also received financial support of HK$1 million in installments.
Jeff said: “Cyberport also assigns an entrepreneurial mentor to each project to help the company promote the implementation of the project.”
The preferential policies of the Hong Kong Cyberport Web3.0 base have attracted the attention of many Web3.0 entrepreneurs. Many interviewees told Techub News that many people in their circle of friends are paying attention to Hong Kong Web3.0 and are preparing to start a business in Hong Kong.
AIGO CEO Luo Hu said that there are at least 10 Web3.0 projects that are starting up in Hong Kong in his circle of friends, covering sub-sectors such as finance, e-commerce, DeFi, GameFi, etc., and it is expected that more and more projects will be able to land in Hong Kong.
Luo Hu comes from a leading domestic Internet company. AIGO, which he founded, focuses on AIGC and NFT commercial applications, helping companies and individuals improve efficiency and protect data privacy and ownership. Currently, AIGO is headquartered in Hangzhou and has branches in Shenzhen and other places.
Luo Hu told Techub News that he is preparing to move the company's headquarters to Hong Kong, which is scheduled to be completed by the end of this year.
In April this year, the "2023 Hong Kong Web3.0 Carnival" was held in Hong Kong, with more than 10,000 participants. Hong Kong Financial Secretary Paul Chan said in his speech at the opening ceremony that Web3.0 is an irreversible future trend and he is full of expectations for the development of Web3.0 in Hong Kong.
Luo Hu participated in the conference. He said: "This conference includes AIGC, industrial blockchain, Social Fi, DeFi, GameFi and other sub-sectors, covering the entire Web3.0 ecosystem. This shows Hong Kong's openness to Web3.0 and its determination to promote the development of the Web3.0 ecosystem, and also sees room and opportunities for development."
With the help of local associations in Hong Kong, Luo Hu has set up an office in Kwun Tong, Kowloon, and submitted applications for entry to Cyberport and Science Park.
Luo Hu said: "The service is very considerate and user-friendly. All you need is a product prototype. The information you submit is not complicated. It is just information in daily business, such as BP, etc. The help that can be provided to the enterprise is listed in great detail. You can feel that they are enthusiastically helping you."
According to Luo Hu's calculations, if he can successfully apply for the incubation program, he can move his headquarters to Hong Kong within six months and achieve a zero-cost transition. "The support from the incubation program is close to the investment level of angel round investment."
Gathering in Shenzhen and entering Hong Kong
"Almost all Web3.0 entrepreneurs in mainland China are eyeing Hong Kong. There is a trend now that entrepreneurs from all over the country are gathering in Shenzhen," said Ram (pseudonym).
Ram is an "old man in the crypto industry". He entered the crypto industry around 2015 and has been engaged in investment, NFT entrepreneurship, etc. Ram said that he has been in Shenzhen for several months and hopes to find opportunities in Hong Kong Web3.0. He is planning to start a business in blockchain + foreign trade.
At a small-scale Web3.0 gathering held recently, Ram met entrepreneurs from Beijing and Hangzhou. Without exception, their purpose of coming to Shenzhen was to prepare for entering Hong Kong.
Ram said that with Hong Kong's support for Web3.0, small gatherings in Shenzhen that had been dormant for a year have suddenly increased recently.
Many interviewees said that Hong Kong has convenient transportation due to its proximity to the mainland, and its cost of starting a business and living is lower than that of Singapore, while there is widespread cultural discrimination against Chinese people in Dubai, Europe and the United States.
After comprehensive consideration, Hong Kong remains the first choice for Chinese entrepreneurs.
Bao Yu, vice president of the Hong Kong Web3.0 Association and member of the United Nations Asia-Pacific Digital Economy Working Group, told Techub News that Hong Kong has a good platform, and Shenzhen has a lot of talent and good technology. The combination of the two can produce a better stimulation effect. The best entrepreneurial model is to have business, investment and financing, and compliance in Hong Kong, while key business personnel such as development are placed in Shenzhen and other places.
Currently, Bao Yu is promoting the implementation of multiple projects such as DePIN, AI, and Web3.0+ medical in Hong Kong.
Jeff, co-founder of READ2N, said: "To start a business in Hong Kong, you need to have reasonable expectations and then take corresponding actions. We actively embrace Hong Kong's policies and explore some possibilities, but there is no need to move all of us to Hong Kong at once. Hong Kong has preferential policies, and entrepreneurs should embrace these policies and enjoy the convenience and cost savings brought by these policies."
It is understood that currently entrepreneurs who go to Hong Kong almost all place a small number of compliance and marketing personnel in Hong Kong, and most personnel are still in the mainland. For some projects, only the person in charge occasionally visits the office in Hong Kong to ensure "attendance rate."
Yang Wei, founding partner of Divide Capital, also gave advice to Web3.0 entrepreneurs going to Hong Kong: “Don’t go to Hong Kong blindly. Think about what you want.”
Yang Wei has more than 10 years of entrepreneurial experience, having experienced the Internet 1.0 and 2.0 eras. He once worked at Tencent and has many years of experience in investment and capital markets. In 2017, Yang Wei began to invest in the Web3.0 field, mainly investing in projects of friends around him.
Hong Kong is a place Yang Wei often visits, but due to the impact of the epidemic, there have been some interruptions. At the end of last year, when the epidemic ended and Hong Kong issued a virtual asset declaration, Yang Wei immediately went to Hong Kong to investigate the development opportunities of Web3.0.
In May, Yang Wei decided to corporatize his Web3.0 investment business in Hong Kong, turning his individual sporadic Web3.0 investment into an institutional investment. Currently, Yang Wei is looking for office space and recruiting talent in Hong Kong. Some of the Web3.0 projects he has invested in have already landed in Hong Kong, and some are preparing to apply for Cyberport's incubation program.
In Yang Wei's view, no matter how the international situation changes, global trade will continue to exist for a long time. Hong Kong's importance in connecting the mainland and the world is self-evident. Hong Kong is now vigorously promoting the Web3.0 ecosystem, which is a rare opportunity for entrepreneurs.
However, starting a business in Hong Kong also means high costs, including high rents and high labor costs. Yang Wei said that compared with Beijing's rents, the core areas of Hong Kong may be four or five times more expensive, and labor costs are also much higher.
Yang Wei values Hong Kong's potential advantages. "The cost needs to be calculated comprehensively, including policy support, entrepreneurial vitality, international vision, industry exchanges, etc. If calculated in this way, Hong Kong's cost is not high."
Compliance game
In addition to high costs, Web3.0 companies coming to Hong Kong also face compliance challenges, the first of which is opening a bank account.
Harly (pseudonym) has been engaged in asset management for a long time. During the crypto bull market two years ago, he switched to cryptocurrency asset management and developed an asset management software system.
Harly said that it was not possible to comply with regulations before, and there would not be much legal risk if the company did not raise funds publicly. Now that Hong Kong can comply with regulations, he hopes to register a company in Hong Kong and conduct the business in compliance with regulations.
But after several trips to Hong Kong, Harly was a little disappointed. "It's much harder than I imagined. Applying for a license costs at least several million. You need to build your own compliant infrastructure and hire at least two ROs (license officer and executor). After the application is successful, only 10% of your assets can be allocated to the cryptocurrency industry within a year. Add in the rent, personnel, legal fees and other costs, and it may cost 20 million."
"By this calculation, it's better to just stock up on pancakes," Harly said helplessly.
"Big cake" refers to Bitcoin, and the current market price is 220,000 yuan per coin, and the previous highest price was 460,000 yuan per coin. Harly predicts that Bitcoin will usher in the next halving cycle in 2024, and Bitcoin may usher in a big rise.
Harly also encountered an unsolvable problem - the bank refused to open an account. Many Web3.0 entrepreneurs also told Techub News about similar experiences of banks refusing to open accounts. Even if they were in the "blockchain-friendly banks in Hong Kong" on the list provided by the Hong Kong Monetary Authority, they still could not open an account.
Another industry insider told Techub News that he used his connections and contacted leaders and friends in the bank, but was unable to resolve the issue. The other party responded that "they had not received any notification and could not approve it, otherwise they would have to bear the legal risks."
The industry insider told the reporter that Hong Kong has the support of the mainland and is cooperating with the mainland to strengthen anti-money laundering supervision. Cryptocurrency is one of the important channels for money laundering. Hong Kong needs wisdom and strong promotion from the industry to solve the problem of Web3.0 corporate bank account opening.
In response to the difficulty for virtual asset companies to open bank accounts, the Hong Kong Monetary Authority has convened a meeting of banks and virtual asset companies, requiring banks to provide guidance to virtual asset companies on matters such as the materials required for opening accounts.
The interim CEO of ZhongAn Bank, Diyun Sin, who participated in the above meeting, told Techub News that the HKMA is very supportive of the development of Web3.0, but also understands that banks may have some concerns and worries. This meeting narrowed the distance between banks and other participants, and both sides could better understand each other's needs.
Xian Diyun introduced that when a virtual asset company opens an account, the bank needs to conduct customer research, which may take two to three weeks for a simple one, but may take longer if the shareholder structure is complex.
However, some companies have stated that they should not encounter difficulties in opening an account.
READ2N co-founder Jeff told Techub News that since it has passed Cyberport's incubation program and has Cyberport's endorsement, it is expected that opening a bank account will be smooth.
Previously, Jeff had communicated with the bank regarding account opening.
He believes that since Hong Kong is vigorously promoting the development of the Web3.0 ecosystem, these problems will gradually be resolved.
Low tide is a good time to start a business
In April this year, Web3.0 activities in Hong Kong were extremely popular. People from all over the world who were interested in Web3.0 flocked to Hong Kong. More than 100 Web3.0 activities were held in Hong Kong within one month. One entrepreneur said, "There are endless activities to participate in from morning to night, until the early morning."
Three months later, the booming Web3.0 scene in Hong Kong is no longer there.
Bao Yu, vice president of the Hong Kong Web3.0 Association, said that the ebb tide was expected. There are malicious sickles and victimized leeks in the Web3.0 world, and Hong Kong is hoping to solve this problem. The value of blockchain technology innovation, the application value of reducing the transaction costs of stocks and other products in the form of tokens, increasing transparency, the natural financing function, and changing the business model of financing, these are the real value of Web3.0 that entrepreneurs should pay attention to.
Hong Kong is at the forefront of the world in terms of Web3.0 compliance. Bao Yu said that Hong Kong has clarified the licensing system for virtual asset exchanges, and everyone from the Chief Executive to the Financial Secretary is vigorously promoting Web3.0. Such a strong determination is unmatched anywhere in the world. Unlike Singapore, Hong Kong also allows local residents to participate in compliant virtual asset investments.
On June 1, the new licensing system for virtual asset exchanges in Hong Kong officially came into effect, allowing retail investors to trade virtual assets on licensed platforms.
Hong Kong Legislative Council member Wu Jiezhuang told Techub News that more than 150 companies have expressed their intention to submit license applications, and some companies have begun to submit applications one after another. Two companies that have previously obtained partial licenses are also submitting supplementary materials.
Bao Yu believes that the core issues of Hong Kong's Web3.0 have been resolved, and other details are just a matter of time. The Hong Kong government's compliance pace is also very well controlled. There is no such thing as a bad situation, it is just a matter of whether it reaches 100 trillion or 100 trillion.
Many entrepreneurs told Techub News that real industry practitioners should not be too concerned about the ups and downs of currency prices, but should focus on real value and long-term value. The lower the tide, the more suitable it is for starting a business and the better time to master the basics.
Gao Zhimin, founder of Bainawei Technology, attaches great importance to the blockchain's ability to empower the fragmentation of rights and interests. He said that blockchain has the characteristics of decentralization, openness, and immutability. With the help of blockchain technology, rights and interests such as real estate with low liquidity can be fragmented and put on the chain, greatly enhancing asset liquidity.
Gao Zhimin graduated with a Ph.D. from the University of Houston in the United States. He has been researching blockchain and other technologies for a long time and has successfully implemented a national-level blockchain project for all aspects of shipping in the United States. At present, Gao Zhimin has applied for a cultivation plan from the Science Park and Cyberport, and the project he submitted is the fragmentation of real estate and shipping rights.
Elf Jump CEO Ma Youxin is preparing for his trip to Hong Kong. He said that he has signed up for the Web3.0 welfare roadshow series BIG DEMO DAY roadshow on July 25, hoping to find like-minded partners and angel investors.
BIG DEMO DAY is jointly organized by Central Research and Hong Kong Cyberport, and co-organized by Techub News. Many global investment institutions and family offices will participate with high-quality projects.
The project that Ma Youxin is preparing is AIGC+NFT. He said that he hopes his project can break away from the logic of domestic digital collections, focus on PFP created by AIGC, build a fan economy, combine cultural and creative peripherals, and extend the consumer field.