- Jack Lau
San Francisco programs for Startups Here?
Been spending a week in the Bay Area, supposedly taking a break. Yes, have seen how Uber Eats works, how Zip Car zips along, how apps are used pay and reload parking meter, and how a new sports stadium can be completely useless for a sports team to do well (OK, the last one is for people who watch American football). If America is lacking of any money in other infrastructure, it must have poured all the resources in football stadium. The stadiums are just really nice and new. From colleges to cities, all these new stadiums are just impressive. (O.K. So too are the new buildings of the various business schools. They are impressive too.)
And, if we write yet another article comparing an American enterprise like UberEats (https://ubereats.com/) and the likes of such in China such as Eleme ("Hungry Now"), probably some of you will turn off this blog site :) So, maybe we will do the comparison some other time. (Ha ha)
Before leaving for the Bay Area though, met someone from a San Francisco incubation center called 500Startup (http://500.co/) The idea of incubation center has already spread across many cities. Usually incubation centers, if run by private organizations, would select some teams through either applications or competitions. The selected ones would get free rental for a period of time, from a few months to probably one year. Incubation centers would organize a great number of activities to match-make, teach skills, and introduce new topics to the teams. Partly because of the current trend of favoring software (things like apps), and partly because most of these centers are in good city locations and space would be limited, most of the teams entering the incubation centers are very purely software oriented. One would walk into such a center seeing a great number of open offices, shared benches, and an open kitchen, with writings of events and "words of wisdom" on the walls. Really great stuff. But, one thing most of these centers won't do would be to invest directly in cash into the startups.
500Startup is an exception. It has an interesting model. Once a startup is selected into the program, 500Startup will invest US$125,000 in exchange for a 5% equity. (In reality, they subtract $50,000 for various expenses. So, the "net" amount would be $100,000 for 5%.) The startup will get an office at the incubation center for 4 months. So essentially, immediately upon admission, the startup would be worth US$2.5M. The startup can go from there.
So, what is the relevance to folks in this part of the world?
Well, what if we tell you that some young folks from Hong Kong have long ago taken advantage of the program….. Here is this case:
In 2008, Ray Chan and his brother Chris Chan, graduates of the University of Hong Kong, decided to create a web site platform to share funny jokes. The site is called 9Gag.com (http://9gag.com/) For those of you who speak Cantonese (the Chinese dialect popular in regions south of Guangzhou including Hong Kong and Macau), you will appreciate that the name connotes to trash talk in English.
Well, 9Gag entered the 500Startup program, got admitted, and even moved to San Francisco. They fine-tuned their ideas and skill set. And, In 2012, they received US$5.8M funding from Silicon Valley venture funds.
Interestingly, they eventually moved their headquarter back to Hong Kong. But, if you look at their web site, the contents are more American centric than Asian centric, probably because their user base are mostly Americans.
We thought this would be an interesting story. A startup from Hong Kong, which had received money and "training" in San Francisco, and moved back to Hong Kong, but operating a site which is essentially based on American culture.
We have no idea how big or how well they are doing right now. But, as far as we are concerned, they have gone a long way and have already been places and taken routes few have ventured.
Will probably write more based on thoughts and observations on this trip. Just to keep you in suspense.
And, whatever you are doing, please stay healthy. The author has yet succumbed to another episode of breathing and lung problem. Absolutely no fun and had to be pretty much in bed for a few days. We absolutely hate dust mites…
Have a great weekend.