The Hong Kong government has launched a HK$2 billion ($256 million) Innovation and Technology Venture Fund (ITVF) to stimulate interest from venture capital (VC) funds, in a bid to support local innovation and technology startups.
The government and each VC fund will invest in local technology startups at an overall matching investment ratio of approximately 1 to 2, according to Hong Kong's announcement from the Innovation and Technology Commission on Friday.
The launch of the Innovation and Technology Venture Fund Corporation (ITVFC) aims to help fill the funding gap for local technology startups and was set up solely to monitor and administrate the initiative. It will be a passive investor that only makes investment in the startups upon invitation of partnered VC funds, the government said.
All VC funds, no matter where incorporated, are welcome to apply to become co-investment partners under the program, it added. The selection of VC funds will be based on a set of criteria and the advice of an independent Advisory Committee, and the successfully selected VC fund will enter into an agreement with the government with rights and obligations set out clearly in the terms.
The ITVF is open for applications until January 15, 2018.
Hong Kong -- which has heavily depended on four pillar industries including trading and logistics, financial services, professional and producer services, and tourism -- is behind in innovation and technology to mainland China and other developed economies.
Over the past few years, the local government has vowed to invest in the tech sector to facilitate the development of new startups, in a bid to make them the next economic growth engine for the city.