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Scott Thompson, CEO of Hong Kong startup thinkproperty.com, has just become one of the first tenants in a new business incubator run by one of Asia's biggest property developers. Are congratulations in order? The 28-year-old Brit isn't sure.
Thompson admits that joining up with an incubator wasn't the ideal solution for his two-year-old company, which creates and operates Web sites for property agencies and also offers listings for thousands of Hong Kong apartments. Until recently, Thompson and his handful of employees were working out of a cramped flat in Discovery Bay, a remote Hong Kong suburb an hour-long ferry ride from downtown. Having spent so much of their time and money getting the company started, they figured thinkproperty.com was ready to move on to the next stage and get some direct investment from venture capitalists.
Then technology stocks crumbled, and Thompson had to readjust his sights. "We feel as if we're in primary school, and we've been kept back a year," he sighs. "We were ready to go to secondary school, but the teacher said we had to stay behind."
ANTICLIMAX.
Thompson shares that situation with many Asian entrepreneurs share right now. Last year, Asian investors fell in love with the Net, and venture-capital money flocked to the region's dot-coms as part of the next big thing -- the growth of the non-American Internet.
So it's a bit of an anticlimax for Thompson to find himself in an incubator. As the name suggests, a business incubator is a place for young companies to receive support, helping them grow from corporate infancy toward maturity. In return for injecting capital, providing office space, and offering all sorts of financial, legal, and strategic services, the incubator owners take equity stakes in the startups.
These incubators have become very popular in Asia, as investors figure that the technology industry has wide-enough margins to allow middlemen to come in and still leave enough rewards for everyone. In Hong Kong, one of these new incubators -- techpacific.com -- has already gone public on the GEM exchange, Hong Kong's answer to Nasdaq. And a bunch of others, with names like Incubasia, AsiaAlliance, and Cyber Labs, have ambitious plans
across the region.
FEVER STRIKES.
Until the Nasdaq crash, Thompson thought he didn't need the pampering that the incubators promised. Ironically, the former property agent got his start with thinkproperty.com during another crash -- the 1997 collapse of the Hong Kong property and stock markets. As the Asian financial crisis engulfed Hong Kong, Thompson bailed out of the business of being an agent and decided to set up a company that would bring Hong Kong's real estate business into the Internet age.
Trying to sell investors on a Net company back then wasn't easy. Unlike in the U.S., "there was no buzz for dot-coms," he recalls. "People told us it was a fad." A year later, in 1999, Asia caught Net fever, and Thompson started looking for venture-capital investors. He came close with one company, but in late 1999, that deal fizzled. "The money wasn't smart enough for us," he says. Thompson wanted an investor that could add strategic value. But this investor could offer "just cash," he says. By yearend, the talks were off.
Thompson wasn't too worried. "We had enough cash," he says. "We weren't desperate." Both Nasdaq and the Hang Seng were soaring into record territory, so there wasn't too much of a rush.
NEW URGENCY.
Now, of course, Thompson has changed his priorities. Rather than hold out for the perfect direct investor, he has hooked up with an incubator. Called base88, it's backed by Sino Land, a real estate company listed in Hong Kong and controlled by Robert Ng, a Singaporean developer with stakes in some of the region's biggest developments. Base88 is run by former technocrat James Liu, a Taiwanese who last year gave up his job running the Hong Kong government's incubator to join the private sector. The company takes up to 15% equity stake in the startups that it decides to nurture.
Asian dot-coms are suffering, as people realize that many companies won't survive the coming months. So there's a new sense of urgency for young Thompson. Given Sino's experience in the property business across the region, he figures thinkproperty.com stands to benefit from a tie-up with its incubator subsidiary. Besides the half-million dollars that base88 has injected, the incubator can offer free office space, allowing Thompson to focus more on his business.
He has signed up eight property agencies so far, and his home page boasts that thinkproperty.com currently has $672 million worth of properties for sale, covering 752,059 sq. ft. It has an additional $9.5 million of listings available in monthly rentals, covering 2.4 million sq. ft. And Thompson says that 60 or so more agencies will be signing up soon.
For now, Thompson is willing to put up with life in an incubator. "We've spent two years developing our system," he says. "We don't need to waste any more time mucking about." Having gotten out of his old business after one stock-market crash, he's determined to tough it out through this one.
Einhorn is Hong Kong correspondent for Business Week. Follow his Online Asia columns every Monday, only on BW Online
EDITED BY DOUGLAS HARBRECHT
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