Non-Dilutive Funding in Hong Kong

Dr. Cory KiddFounder and CEOIntuitive Automatacoryk@iabots.com

Why you’re in the right place to raise some money

and not get screwed

Dr. Cory KiddFounder and CEOIntuitive Automatacoryk@iabots.com

Initial Split

Founder A 45%

Founder B 30%

Founder C 25%

Example: Raise 3 Rounds

Initial Split Raise 200K for 20%

Founder A 45% 36%

Founder B 30% 24%

Founder C 25% 20%

Investor A 20%

Example: Raise 3 Rounds

Initial Split Raise 200K for 20% Raise 750K for 15%

Founder A 45% 36% 31%

Founder B 30% 24% 20%

Founder C 25% 20% 17%

Investor A 20% 17%

Investor B 15%

Example: Raise 3 Rounds

Initial Split Raise 200K for 20% Raise 750K for 15% Raise 3M for 15%

Founder A 45% 36% 31% 26%

Founder B 30% 24% 20% 17%

Founder C 25% 20% 17% 14%

Investor A 20% 17% 14%

Investor B 15% 13%

Investor C 15%

Example: Raise 3 Rounds

Initial Split

Founder A 45%

Founder B 30%

Founder C 25%

Example: Same Funding, One Investor

Initial Split 200K Incubation

Founder A 45% 45%

Founder B 30% 30%

Founder C 25% 25%

Example: Same Funding, One Investor

Initial Split 200K Incubation 750K Loan

Founder A 45% 45% 45%

Founder B 30% 30% 30%

Founder C 25% 25% 25%

Example: Same Funding, One Investor

Initial Split 200K Incubation 750K Loan Raise 3M for 15%

Founder A 45% 45% 45% 38%

Founder B 30% 30% 30% 26%

Founder C 25% 25% 25% 21%

Investor A 15%

Example: Same Funding, One Investor

Examples ComparedInitial Split Raise 200K for 20% Raise 750K for 15% Raise 3M for 15%

Founder A 45% 36% 31% 26%Founder B 30% 24% 20% 17%Founder C 25% 20% 17% 14%Investor A 20% 17% 14%Investor B 15% 13%Investor C 15%

Initial Split 200K Incubation 750K Loan Raise 3M for 15%

Founder A 45% 45% 45% 38%Founder B 30% 30% 30% 26%Founder C 25% 25% 25% 21%Investor A 15%

Examples Compared

• Sell for $30 million

• In the 3 rounds of investors case, Founder A’s share is $7.8 million*

• In the incubation program, loan, and one investor case, Founder A’s share is $11.5 million*

*with preferences and other terms that come with many investor shares, the math won’t work out quite this simply, but the magnitude of the difference will be similar

So what can I do?

• Join an incubators/accelerator program

• Get a loan

• Generate revenue

• Be Lean

Two HK programs

• Hong Kong Science Park Incu-Tech Programme (or newer Incu-App Programme)

• SERAP interest-free loan

Incu-Tech

• 3 year incubation program

• Rent-free office space for the first year

• Partial expense reimbursement up to HK $645,000

• At Hong Kong Science and Technology Park

Incu-Tech: Application

• Applying is like raising money -- you’ll present a business plan to convince the committee that you’re building a company that should be in the program and the technology park.

• Plan 2-3 months from start to approval if you have your plan together.

Incu-Tech: Questions?

SERAP

• Stands for Small Entrepreneur Research Assistance Program

• It’s an interest-free loan that gets paid back as a percentage of revenue or later investment

• Maximum amount is currently HK $6 million

SERAP: Application

• Applying means you have to convince the committee that you have a technologically innovative project that will make money in a few years.

• It’s defined by the “project” and not the company, so you present details of the work that you’re doing.

SERAP: Application

• The hardest part is the budget: you need a detailed, line-by-line, month-by-month budget for the duration of the project

• Plan for a month of application preparation and then 2-3 months from submission to project start

SERAP: Questions?

Other Resources

• Many other programs and spaces:

• Accelerator HK

• HAXLR8R (Shenzhen)

• Co-working spaces like CoCoon, the Hive, BootHK

• Cyberport

• Other ITC (government) funding schemes

Other ResourcesPeople:

There are a lot of people in Hong Kong -- and here today at BarCamp -- who have created growing companies. Find us in person or online and ask your questions.

I’m always happy to provide more information about how we have funded Intuitive Automata and how you can apply those lessons to your startup.

Cory Kidd

coryk@iabots.com

Twitter: coryk