Investors are putting money in fewer, more established firms.
Financial technology (fintech) startups are expected to remain the focus of venture capital in Hong Kong this year as investors channel money into fewer, more established companies, with total funding projected to reach $7.8b (US$1b).
Fintech firms accounted for the biggest share of venture investment last year, raising $4.2b (US$532m) out of the roughly $5b (US$638.2m) deployed across 32 funding rounds, according to data from Tracxn Technologies Ltd.
Two of the biggest deals involved fintech companies. PremiaLab HK Ltd. raised $1.7b (US$220m), whilst Red Dot Technology Ltd. got $837.8m (US$107m).
Investors backed fewer startups last year as venture deal volume fell by 30%, but committed larger sums to selected companies. The median investment rose from $39.2m (US$5m) to $54.8m (US$7m), according to Tracxn founder Neha Singh.
“Investors are looking for companies that are not just focused on rapid growth, but also have a clear path to making a profit,” she told Hong Kong Business via Zoom.
Lap Man, co-founder and managing partner at Beyond Ventures, said investors are also focusing on startups with clear global potential, particularly those expanding beyond domestic markets.
“Solutions that only target the domestic market may have reduced funding potential,” he said via Zoom.
The shift reflects a more cautious investment environment following the surge of venture capital funding earlier in the decade.
“The era of ‘spray and pray’ is over,” Herston Elton Powers, founding managing partner at 1982 Ventures Pte. Ltd., said in an emailed reply to questions. “Company valuations fell, investments became smaller, and founders who understood their numbers rose to the top.”
Venture funding in Hong Kong rebounded last year after falling sharply in 2024. Total funding reached about $5b (US$638.2m), up from roughly $2.1b (US$274m) the previous year, Singh said.
Improving stock market conditions could help sustain venture investment, Lap pointed out.
“All venture investments eventually need an exit,” he said. “If there is no exit, there is no way to recycle the capital.”
Meanwhile, Jimmy Ng, senior director at Gobi Ventures, said that Hong Kong’s position as a gateway to China and global markets continues to attract capital.
“Companies expanding internationally often choose Hong Kong as a landing point,” he said in a Zoom interview, noting that this dynamic is likely to support deal activity despite ongoing geopolitical uncertainties.
Hong Kong’s benchmark Hang Seng Index rose 27.8% in 2025, its strongest performance since 2017, following a 17.7% gain in 2024.
The city’s initial public offerings (IPO) also strengthened. Companies raised about $285.8b through 119 listings last year, with three deals ranking among the world’s 10 biggest offerings, according to Hong Kong Exchanges and Clearing Ltd.
“If the market continues to perform strongly, that would be very positive,” Lap said, noting that stronger IPO activity would let venture funds return capital to investors and reinvest in startups.
Government initiatives are also helping attract venture capital. Programmes such as Hong Kong Investment Corp. Ltd. (HKIC), established in 2022, have increased funding for technology companies and drawn additional investors into venture deals.
“The HKIC has been investing aggressively in the region and Mainland China,” Lap said. “They claim that for every dollar they invest, they leverage another $6—they have that kind of multiplier effect.”
Favoured sectors
Investors expect funding to continue flowing mainly into fintech, blockchain and artificial intelligence (AI) startups.
Powers said the opportunity in fintech remains long-term as many people in emerging markets still lack access to financial services. “Fintech remains the backbone—it is structural, not cyclical.”
“Giving 700 million people access to financial services doesn’t [happen] in a single funding cycle,” he said.
He added that newer segments such as AI-native fintech and cross-border payments infrastructure are expected to gain traction as the sector matures.
At the same time, funding is becoming more concentrated in companies that have already demonstrated traction. “Investors are putting more money behind existing companies,” Singh said, pointing to a shift toward later-stage deals and fewer early-stage bets.
Artificial intelligence is also gaining traction in Hong Kong’s startup ecosystem. Tracxn data showed the city has about 231 AI-focused startups, although only 28 have received venture backing so far.
AI startups raised $110.4m (US$14.1m) across five funding rounds in 2025. By February this year, they had already secured $184.8m (US$23.6m), suggesting funding momentum is building.
Other sectors may also attract investor interest. Ng said China’s push to develop domestic technology capabilities is encouraging investment in semiconductors and other deep-tech sectors.
He added that areas such as satellite technology and brain-computer interfaces are gaining attention across the region.
Healthcare could also draw more funding as Hong Kong’s ageing population increases demand for services.
“There are not enough technological solutions to address this challenge,” Ng said. “This creates significant potential, especially on the service side.”
Another promising sector is climate tech, Singh said. “Many cities are targeting carbon neutrality by 2050, which will require investments in urban infrastructure and carbon management solutions.”
Lap said biotechnology could emerge as a key investment area. “Beyond that, other sectors such as electric vehicles and batteries are also attracting interest.”