Key Hong Kong FinTech investment stats in Q1-Q3 2023:
• Hong Kong FinTech deal activity is on track to reach 28 transactions in 2023, a 46% reduction YoY
• Hong Kong FinTech investment is expected to total at $159m in 2023, a 50% drop from 2022
• WealthTech was the most active FinTech subsector in Q1-Q3 2023 with seven deals, a 33% share of all transactions
Hong Kong’s FinTech sector has not remained unscathed from the global drop in funding during 2023. In 2023, Hong Kong’s FinTech deal activity is poised to reach 28 deals, marking a significant 46% decrease compared to the previous year. Hong Kong FinTech companies combined investments for 2023 are estimated to amount to $159m, reflecting a substantial 50% decline from the figures in 2022.
OneDegree, a digital general insurance company, had the largest FinTech deal in Hong Kong during Q1-Q3 2023 after raising $27m in their latest venture funding round. Hailstone Labs, a Hong Kong based Web3 venture studio, has announced a strategic investment in OneDegree Group. Hailstone Labs and the OneDegree Group have partnered to establish standards, drive blockchain innovation, and nurture talent in the Web 3.0 sector. Over the past two years, they collaborated with the Society of Actuaries (SOA) to conduct essential research on Web 3.0 risk taxonomy, aiming to transform the digital asset insurance industry. Due to recent policy developments in Hong Kong’s blockchain and Web 3.0 sectors, insurance has become mandatory for centralized digital asset firms to maintain regulatory compliance. The OneDegree Group’s digital asset insurance line, supported by their cybersecurity experts at OneInfinity, will offer customized risk management solutions for digital asset service providers to mitigate various security incidents.
WealthTech was the most active FinTech subsector in Q1-Q3 2023 with seven deals, a 33% share of deals. Blockchain & Digital asset technologies were the second most active with five deals, a 24% share of deals. InsurTech was the third most active with three deals, a 14% share of deals.
The Hong Kong Government is addressing the financial challenges associated with technological innovation by offering subsidies and grant schemes through organizations like Cyberport and HKSTP to support FinTech solution providers in accessing funding and attracting investors. These grant schemes have a dual purpose: (1) assisting FinTech solution providers in realizing their business ideas, and (2) promoting FinTech adoption among users to stimulate demand. Examples of these initiatives include Cyberport’s Creative Micro Fund, which began in 2009 and provided grants of HK$100,000 for new startup projects and HK$200,000 to support startups participating in overseas exhibitions through its Overseas/Mainland Market Scheme. Additionally, in 2021 and 2022, the PoC Subsidy Scheme allocated funds of up to HK$150,000 to institutions to various subsectors of the FinTech industry.
