Most people do not actually distinguish between Startups and SMEs (i.e. small businesses). But they are actually two different entities. For many outsiders, a startup should stay as an idea, or some HK college students testing out the water in the market (or local society). But it is not that simple.
A startup in Hong Kong is usually a temporary team assembled to search for a repeatable and scalable business model, or build a software product (should it be related in the field of technology, or a technology solution to enhance a traditional business). A startup is the stage of a company in which the founders and his peers are searching for solution to a specific problem (that happens to a specific group of users). The solution would be reflected in the product that the start-up is developing. Once the product is built in its minimal viable product form, the startup enters its stage two where the founder’s main goal is to sell the product to the customers and generate sustainable revenue (for continuous growth).
Getting funds for the HK startup has always be a problem for many founders and co-founders. The main reason for getting angel investors to invest in the Hong Kong start-up in the early stage is to ensure the continuous growth of the business, or while the start-up is busy developing the software product, it will not run out of cash to pay its monthly bills. The funding is additional cash usually in the form of diluted equity. i.e. It is sharing profits with other investor or owners. Prior to getting funds from investors, the one very important step is to go through the Hong Kong company registry.
The main mission behind the startup is to build the product or solution. The outcome of this would translate into a scalable and repeatable business growth. Not all Hong Kong startups would have the opportunities to grow into a disruptive company that has a significant impact on the existing market and even create a new market of its own. But that is what the mission is all about.
The SME is rather an independently owned organization. A typical Hong Kong SME in general sells known products to known customers in a known market. It does not actually have a mission to innovate or create a new technology product to solve very specific problems of users. In order for startups to grow into a large disruptive enterprise, they seek additional funding by way of diluted equity. (sharing profits with other investor/owners and so losing a measure of control). This is the concept of relinquishing control of a startup. But in a HK SME, the owner would run his own business.
