HK$2 Billion ITVFC to Boost Local I&T Investment

Wednesday, July 12, 2017

(HKVCA by staff writer) – Annie Choi, Commissioner for Innovation and Technology for the HKSAR, provided the latest details on the Innovation and Technology Venture Fund (ITVFC) at the HKVCA’s Hong Kong Venture Capital Forum held on Monday. The fund was announced by the Hong Kong government last year with the objectives of encouraging local startup investment, increasing deal flow and addressing the series A-funding gap.

The scheme encompasses a co-investment strategy with an overall matching ratio of 1:2 for eligible local I&T start-ups. The definition of local startups has been broadened to include those with headquarters in Hong Kong and/or R&D, production or significant business occurring in Hong Kong. The maximum contribution by the ITVFC is HK$30 million per deal and HK$50 million per company. While the amount of money may not be large compared to amounts traditionally seen in VC transactions, it may nevertheless be attractive to VCs involved in pitching with local startups.

The ITVFC is a passive investor and GPs have a leading role in the investment when it comes to identifying potential companies, conducting due diligence and negotiating transactions. As to exits, the fund will follow the GP partners’ liquidity strategy and the GP has an option to purchase shares at a pre-agreed price.

The ITVFC is open to all innovation and technology focused funds and they need not be onshore. However, as the objective is one of investing in local startups, the fund’s geographical preference must include Hong Kong with a minimum balance of HK$120 million in uncommitted capital.

For additional details about the ITVCF, please view the video of the fireside chat with Annie Choi by clicking here.