In the first flush of enthusiasm, budding entrepreneurs tend to talk about starting up a new venture on their own, but they soon discover that getting a new business off the ground is never a solo undertaking.
An initial idea or flash of inspiration may be claimed by an individual but, from that point on, success depends on tapping into the experience and expertise of those who have gone before.
Fortunately for entrepreneurs in Hong Kong, there exists a well defined entrepreneurial ecosystem. Specialists stand ready to offer support, guidance or hard-nosed assessments of everything from budget planning and pitching, to sales strategies and creating a market niche for new products or services.
If nascent companies are accepted into a tailor-made incubator or accelerator programme of the type run by Nest Hong Kong, they can expect help with practicalities like raising capital, finding contacts, resolving legal issues and, if all goes well, scaling up for future expansion.
“Success as a start-up requires more than a good idea and hard work,” says chief executive Simon Squibb, who launched Nest five years ago with a view to giving opportunities and making things happen. “It also takes connections, access to relevant knowledge and expertise, and access to capital. I realised there are a lot of talented people in Asia, but they don’t necessarily have the tools and support to make it as an entrepreneur. In that sense, I saw a gap in the market and decided to do something about it.”
Squibb wanted to give start-up founders the chance to follow their dreams by offering a mentor network, office space, the assistance of full-time support staff and, typically, up to US$100,000 in seed capital. Nest, or other private equity backers, might then take a stake in the new venture at an appropriate time.
This incubation model has already helped over 200 young companies achieve lift-off. About a year ago, Squibb decided to branch out further by setting up three accelerator programmes specifically designed to develop start-ups in the fast-evolving sectors of healthcare and wearable tech, fintech and smart cities.
These 12-week programmes are cohort-based, accepting up to eight companies per intake and, where necessary, providing mentorship and educational components. Participants have free access to workspaces thanks to the involvement of partners like DBS Bank (Hong Kong), insurance giant AIA and car company Infiniti. While given freedom to develop their own plans, they can also bounce ideas off each other. And with each programme culminating in a “demo day” to present plans and field questions from an audience of over 100 industry experts and potential investors, there is incentive enough to impress and excel.
“A start-up won’t get into the accelerator unless we really believe in their idea,” says Squibb. “If you’re well organised, it takes only about 25 minutes to apply online, but we make it clear you must have grit. You have to plan, prepare, and have confidence in your proposal. No one here is going to just hand you stuff.”
The 15-strong Nest team, external mentors, and backers focus on context and essentials, what will work and what has to change. For example, they may critique a trial pitch, query budget assumptions, or point to obvious flaws in an over-ambitious sales plan.
“We are not here just to observe or entertain,” Squibb says. “We have a proactive approach to telling people what they don’t know. For the first few months, we take away the pressure and distractions of having to pay office rent and electricity bills, so the companies can get on with building prototypes and gaining traction,” Squibb says.
As a matter of principle, Nest suggests that all start-ups keep an open mind. For instance, an original scheme might be to build a B2B solution for a bank. But ongoing work and feedback could then show the idea simply won’t fly. When it’s clear that an idea won’t work, it is better to listen, adapt, rethink and reposition rather than crossing fingers and forging ahead regardless.
“It might mean choosing a different price point or pivoting in other ways,” says Squibb, who started a gardening business in Britain at the age of 15 and, after moving to Hong Kong 18 years ago, set up a successful creative agency focused on brand building and marketing communications. “The real test [and arbiter] of any business concept is the market and what customers are prepared to pay for.”
In Hong Kong, Nest now has a network of some 45 mentors and close to 600 high-net-worth individuals keen to put money into start-ups, and Squibb emphasises that any investment is, ultimately, not in ideas, but in people. A brilliant entrepreneur can make even an average idea work. And with the right support, advice and encouragement, entrepreneurs with the drive and courage to start a new business can overcome a perceived lack of experience and leave others at the starting gate.
“Last year, we launched Investable, a crowd funding platform that allows professional investors to browse through a wealth of pre-vetted opportunities in a range of industries,” says Squibb who, since 2010, has scaled up his own start-up by establishing a presence in London, New York, San Francisco and, most recently, Nairobi. “This is another way for us to help passionate entrepreneurs build successful businesses.”
This article appeared in the Classified Post print edition as Hatching start-ups.
