Traditional Capital Raising - Hong Kong

The Total Capital Raised in the Traditional Capital Raising market market in Hong Kong is expected to reach US$2.42bn by 2024.
Venture Capital is set to lead the market with a projected volume of US$2.03bn in 2024.
When compared globally, the United States is anticipated to generate the highest Capital Raised amount, reaching US$159.0bn by 2024.
Hong Kong's Traditional Capital Raising market is witnessing a resurgence in interest from local investors seeking stable returns amidst global economic uncertainty.

Definition:

The Traditional Capital Raising market relates to venture investment in startups and emerging companies that are not yet generating positive or significant revenue but have high growth potential. The capital is mostly raised from venture financial institutions, and minorly from banks.

Structure:

The market consists of two segments:
- The Venture Capital market refers to private equity funding that is offered to startups and emerging companies.
- The Venture Debt market refers to the combination between equity and debt financing, which is used to finance the early stage and growth stage capital-backed companies.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Additional information:

Although the Traditional Capital Raising market is highly competitive in investment opportunities due to the rapidly high growth rate of startups and emerging companies, it has become more popular for these businesses who cannot get traditional loans from banks, to develop and grow their businesses or projects.
Key players in this market are companies such as Sequoia Capital and Hercules Capital.

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Venture Capital
Venture Debt

Traditional bank loans
Digital capital raising

The Traditional Capital Raising market in Hong Kong has been experiencing significant growth and development in recent years.

Customer preferences: In Hong Kong, customers have shown a strong preference for traditional capital raising methods. This is due to the long-standing reputation and credibility of the traditional capital raising market in the region. Customers in Hong Kong value stability and reliability, and therefore tend to choose traditional methods such as initial public offerings (IPOs) and debt issuances. These methods provide a sense of security and trust for customers, as they are backed by established regulations and oversight.

Trends in the market: One of the key trends in the traditional capital raising market in Hong Kong is the increasing number of IPOs. Hong Kong has become a popular destination for companies looking to go public, particularly those in the technology and financial sectors. This trend is driven by several factors, including the city's strategic location as a gateway to the Chinese market, its robust regulatory framework, and the strong investor demand for Hong Kong-listed companies. Additionally, the Hong Kong Stock Exchange has implemented various initiatives to attract more IPO listings, such as streamlining the listing process and introducing new listing rules. Another trend in the market is the growing popularity of debt issuances. Hong Kong has a well-developed bond market, with a wide range of issuers including government entities, corporations, and financial institutions. Debt issuances provide companies with an alternative source of funding and allow them to diversify their capital structure. The low interest rate environment in Hong Kong has also contributed to the increased demand for debt issuances, as companies can take advantage of favorable borrowing conditions.

Local special circumstances: Hong Kong's unique position as a Special Administrative Region of China has played a significant role in the development of the traditional capital raising market. The city's proximity to mainland China has made it an attractive destination for Chinese companies looking to raise capital and expand their businesses internationally. Hong Kong's legal system, which is based on common law and is separate from mainland China, provides a level of legal certainty and protection that is highly valued by both domestic and international investors.

Underlying macroeconomic factors: Several macroeconomic factors have contributed to the growth of the traditional capital raising market in Hong Kong. The city has a strong and stable economy, with a well-established financial sector and a highly skilled workforce. Hong Kong's strategic location as a global financial hub has also attracted international investors and companies, further driving the growth of the capital raising market. Additionally, the city's favorable tax regime and business-friendly environment have made it an attractive destination for companies looking to raise capital. In conclusion, the Traditional Capital Raising market in Hong Kong is experiencing significant growth and development, driven by customer preferences for stability and reliability, the increasing number of IPOs, the growing popularity of debt issuances, Hong Kong's unique position as a Special Administrative Region of China, and underlying macroeconomic factors such as the city's strong economy and favorable business environment.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.