NEWS WRAP: Business incubator TOJOY to set up base in Hong Kong

The company hopes to attract investors with its big-data approach to nurturing innovative startups by matching them with larger, more mature companies.

By Teri Yu

TOJOY Shared Holding Group, the Beijing-based operator of a Chinese business accelerator platform, will establish a base in Hong Kong, Bamboo Works has learned, as it seeks to distinguish itself from a rival set up by Charles Li, former CEO of the operator of the Hong Kong Stock Exchange, who is setting up his main base in nearby Macau.

While other incubators and venture capital firms primarily focus on growth-stage companies by directly providing financial and other support, TOJOY distinguishes itself as operator of a platform that provides fundraising and other value-added services supplied by third parties. Its big data-driven online and offline platforms connect innovative companies with traditional business owners across China, providing not only capital, but shared experience and other resources such as distribution channels.

The decision to establish an offshore base in Hong Kong comes as a vote of confidence from TOJOY in the city that is rebuilding its image as a regional financial hub post-pandemic. As a private company, TOJOY has yet to release any financial information.

According to its website, the company’s platforms boast over 1.5 million registered entrepreneurs and business owners and over 18,000 potential innovative growth-stage companies. It earns its money by charging fees for its services and acquiring equity stakes in innovative companies it helps to incubate.

Business owners can find companies they wish to nurture on TOJOY’s “Boss Cloud” platform, where those startups can also host online roadshows and other matching functions. TOJOY also hosts offline conferences to promote innovative companies to potential business owners.

Such innovative companies are also receiving strong government support under Beijing’s “Made in China 2025” strategy, which is an important element to doing successful business in China.

According to the latest government data, an average of 23,800 enterprises now launch in China each day, with the total number of micro, small- and medium-sized enterprises exceeding 52 million. Such companies are a critical contributor to China’s economy, providing around 50% of the nation’s tax revenue and 60% of GDP.

But such small enterprises have always faced difficulty accessing funds from a national financial system dominated by state-owned banks that are used to lending to large, often state-run companies that can quickly boost their loan portfolios while keeping delinquency rates low. China’s slowing economy is making banks even more reluctant to lend to such smaller innovative companies.

TOJOY and peers like Charles Li’s Micro Connect are stepping in to fill that gap, trying to reinvent how funding and expertise can be made accessible to small businesses by leveraging data. Both companies are trying to build exchanges that connect capital and resources with micro and small businesses.

According to a recent report by financial publication IFR , TOJOY has hired financial advisors for an IPO that could raise several hundred million U.S. dollars in Hong Kong, where new listings sunk to a two-decade low last year. Only 61 companies were listed in Hong Kong for the year, raising HK$41.3 billion, down 19% and 59%, respectively, from the previous year.

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