Hong Kong’s First Eastern Plans Big Bets on Fintech

The First Eastern Investment Group, a Hong Kong-based private equity and venture capital heavy, is reportedly mulling a big push into Hong Kong and Chinese fintech, according to the SCMP.

The group’s CEO, Victor Chu, said that he expects his firm to invest in at least 10 Hong Kong and mainland fintech companies within the year. Why? Traditionally, the firm would search for new technologies to invest in overseas, but with China’s rapid progress in the fintech arena, Chu felt that he “should come to China.”

The firm has already invested in the region – twice. Earlier this month, First Eastern plunked down $1.18 million for a stake in Bicai, a wealth management product sales app that aggregates and compares products from online Chinese banks. First Eastern’s share in the startup is less than 10%.

Aside from Bicai, Chu’s firm has also invested in Hong Kong-based Valoot Technologies. According to its website, Valoot helps its users not get screwed by hefty credit card foreign exchange rates by sourcing its rates from the market and charging only a tiny fee. It is unclear how large First Eastern’s investment in Valoot is.

Interestingly enough, Valoot’s own founder was a little skeptical about basing his start-up in Hong Kong. However, he did see one quality of Hong Kong that’s absent in the others:

“One entrepreneur told me it is a big mistake to locate a fintech start-up in Hong Kong and I partially agree,” said Ovidiu Olea, founder of Valoot Technologies. “In Hong Kong, people prefer to save and go for better profitability such as apartment purchases in Kowloon or opening up a store to sell things to Chinese travellers.”

However, one benefit of Hong Kong is that “everyone knows everyone,” he added. “I do not see [such strong] connectivity even in London. If a start-up can survive in Hong Kong, it can survive anywhere.”

Perhaps that’s one reason why Chu and First Eastern are investing there? Whatever the case, there’s a lot of untapped potential in Hong Kong startups, so let’s see how it goes for them.

Photo: Nik Cyclist