Recently, Galaxy Entertainment Group Foundation launched the GEG Venture Philanthropy Fund. Partnering with the Macau New Technologies Incubation Centre (Manetic) and the University of Macau, the gaming group hopes to select local businesses and help them develop their technology and business ideas. Business Daily decided to ask Manetics Chairman Dr. Yau Chuk about his views on startups and entrepreneurship in Macau, and what he thinks is missing in the local innovation ecosystem. Appeals for diversification from the government aside, the computer science and Big Data expert believes local technology startups should focus on gaming and tourism, and sees flexible work visa policies as an essential part of economic development.
How was Manetic born?
Because I have Australian nationality, in 2000 the Australian government started discussing if I could start a technology organisation to incubate technology ideas for the Chinese market. They offered a lot of support, but the idea wasnt in progress yet when I talked to Edmund Ho Hau Wah (former MSAR Chief Executive). At the time I had a consulting company serving big companies in Macau and told him my idea for the Australian government, and all of a sudden he asked why I didnt run something like that in Macau, as it would be easier to access China. So the idea started. From then on it was very quick; in one month we had an agreement and he offered a lot of support in terms of policy and infrastructure. So instead of having a technology centre in Australia, I had one in Macau with Manetic.
How does Manetic gets its funding, and what is its budget?
We get some funding through the Macao Foundation, although we mostly fund ourselves through some consulting work. Last year we spent about MOP20 million (US$2.5 million), with about MOP9 million coming from the Macao Foundation, and the rest from us.
Since its inception in 2001, how many companies have been successfully created through Manetic?
In the past 15 years we have actually incubated 150 companies, not many compared to many other places, but Macau is a small city so it is already a lot. We believed 50 of them could actually become operational companies and pursue their businesses, but after 15 years we can see that only about 26 have survived, which is not bad for technology companies, in a field where everything moves really fast, and honestly and its not easy to have a company survive for a long time.
At present, Manetic has a total of 49 companies being incubated in areas covering information technology, environmental technology, bio-technology, design and consultancy. Is there an area Manetic considers more important or more worthy of investment?
Macau is small, so if we just focused on one area, we might restrict ourselves and our startups, so its better to allow a more diverse structure. However, I believe we can still focus a little bit more on one or two areas for better results, as we want to change ourselves and think of different directions. The two hot areas are Information Technology off course, and the other is environmental related businesses. These two areas are important, but I have a feeling it is still hard to push companies to be very successful here, and the reason is that Macau itself is very small. The business size here is not enough to create a big company. IT is a big area and there are so many applications and sectors people can enter, but you rarely become a company like Oracle or Microsoft, or smaller. So our next step is to encourage startups to be more focused on tourism and gaming oriented IT. This particular area is Macaus main business and we can say were number one in that field in the world. From now on, I will encourage startups to rely more on our main industry, rather than to diversify into different angles. I can see that from this year on, we will put more resources into setting up infrastructure and partnerships with different major organisations so they can provide the elements for our startups.
Is that why you decided to partner with Galaxy Entertainment Group Foundation for the GEG Venture Philanthropy Fund?
They approached us some time ago. At that time we thought that we would have to find ways each side could contribute, otherwise I didnt think a partnership wouldve been formed. After thinking for some months and discussing with their Director of Business Development William Yu, we decided that instead of having them investing in our startups, they could support the projects of our startups. Theyre not investing in the company, but supporting some visible projects. This way we can be more application oriented, rather than just investing in a shell company with a floating idea. We wanted to see something come out of the cooperation. When we proposed this, they liked it.
What are the requirements you use to decide what companies to recommend to the GEG Venture Philanthropy Fund?
We suggest that our startups write a proposal describing their product first. Based on that we will challenge them as to whether the product can solve a target problem. If its only an idea from their head, without a real solution for a problem outside, we probably cant fund them. If they can describe the problem clearly and carefully, we will examine their proposed technology product and see if these two will work together and solve it. This is the basic process for selecting our incubatees.
Did Galaxy specify that they wanted gaming focused startups from Manetic?
I encourage them to work together with us in that direction. If the problem is gaming-oriented, obviously Ill encourage Galaxy to examine if the proposed product is really useful.
One of the targets of the Five-Year Development Plan of the MSAR government is to diversify the local economy outside of gaming. Doesnt this approach go against that? Shouldnt Manetic be focused on companies targeting other areas?
To be frank with you, for us to develop startups outside of gaming, is very hard. We try to develop something associated with gaming or in relation to the tourism industry, since that sector is closely connected, directly or indirectly, to other business sectors like resorts or theme parks. If we encourage small startups to look at the current or future situation and understand the existing problems in order to propose solutions for that business sector, they will have more chance of success. Otherwise, if they focus on areas unrelated to the current booming business, the chance to leverage the momentum will be very restricted. I want them to leverage the mainstream momentum. Therefore I think they shouldnt move too far from the principal economy in Macau and try to work closely with that industry. That way they can take part in that sector, and they can improve each other.
Could you give an example of how technology could be used to help reverse the decreasing gaming or tourism revenues?
We have 30 million people coming to Macau every year and luckily our industry is already organised so well to engage this tourism. Therefore we have a lot of customer data, and a lot of business development that can be done by analysing this customer Big Data. If the gaming industry wants to diversify, they have this information to help them.
Shouldnt the return on investment be used by the projects to expand their businesses, instead of being injected back into the fund?
Thats Galaxys idea, they dont really want to take returns from individuals, but they want to give individuals the responsibility to look after the future development in the community. They suggested that and it can be organised that way. Im not very keen on that part at this stage. My focus is on helping the startups develop.
Do you believe Macau has the right kind of support for startups at the moment?
Honestly, there is very strong support for startups from different sources. We have two different government bodies, the Science and Technology Foundation, which provides research money for individuals, the majority of beneficiaries being University members, although they also support individual companies. This money is very useful, since as long as you are working on your project, you dont need to return it.
The other is the new Business Incubation Centre for Youth, which provides zero-interest loans to help startups kick-off their projects and businesses.
Manetic normally doesnt give out money, but we do a lot of surface support, to help them run their businesses and improve their skill sets and mindset. For instance, we run internal self-development programs every two weeks, where we invite guest speakers, and I sit there and interact with our incubatees, to help theme expand their ideas further and help them understand different types of constraints and improvements. These kinds of programs are even more important than money, because without the right mindset and skill you cannot pursue your career further. I personally look at this kind of development more than just money.
What is your opinion on government initiatives to help entrepreneurship and startups? Do they really help, or is the most important thing the startup and the entrepreneur itself?
I prefer that the government doesnt actively intervene. I prefer a little bit of startup support, and thats enough. Business belongs to startups, so they ought to have their own perception and initiative. They should drive themselves instead of being pushed. The government has already offered enough support to startups, we shouldnt spoil the kids. We should only encourage them.
What could be changed to foment more innovation in the territory?
I think the traditional education system has to be changed a little bit. The conventional university and education systems are very general, for example if you attend an MBA program course, they teach you marketing, accounting, how to establish improvement systems for organisations, management skills – all very generic. Once the graduate gets out into the real world here, our system is basically focused on tourism and gaming, very specific, so that generic model creates a big gap, and a lot of stuff you learn at university will hardly be used. You may say that everywhere is the same, but in Hong Kong, if you learn something at university and you specialise in some industry, then you can choose your career and go into that. If you like the transportation industry and use mathematics to calculate all the transportation handling, you can go into transportation and use your special skills. But in Macau the transportation system is so small, we dont need so many planners from university, and you probably cant land in that industry. The only way is to go to casinos or hotels, and thats were most graduates end up.
Maybe we can still retain some of the generic elements of the university system, but we may need more focus on the special characteristics of Macaus society, so we can help those graduates to contribute to the industry, and push that industry to better levels. It would probably be hard for universities to change, but maybe the government and the industries could form some kind of middle man or organisation to help bridge the gaps with hands-on projects.
Countries with good innovation ecosystems tend to have flexible work visa policies. Do you think there should be a more flexible work visa permit scheme in Macau?
Yes I do. Macau is a small city but luckily were first class in gaming and tourism. In the past 10 years we have received a lot of expats helping us to build this empire, but in recent years suddenly it seems our visa system doesnt encourage offering visas to foreign workers. This restricts the development of this city to a more advanced level. If you look at Singapore, back in the 1980s, it wasnt that important in Asia, but in the 1990s they started changing their policies, absorbing talent from everywhere. At that time, a lot of Hong Kong professionals migrated there and for 20 odd years you saw Singapore occupy a high level in the regional rankings in Asia and the world. This is a result of policies attracting external talent.
Talented people wont come here to get your MOP9,000 cash handout! They come to pursue a career and help the society, they actually contribute more than what you pay them. So the government should change this, although only for talented expatriates. It would be really beneficial and could really take us to a world class level; without that were all empty talk.
