Tikking time bomb?

‘Alarming developments’

At midnight on June 30 1997, Hong Kong officially reverted to Chinese sovereignty, ending 156 years of British rule. After a formal handover ceremony on July 1, the colony became the Hong Kong special administrative region (HKSAR) of the People’s Republic of China.

An hour before midnight June 30 2020, on the 23rd anniversary of the city's handover to China from British rule, China imposed a national security law on Hong Kong, aimed at stamping out opposition to the ruling Communist Party.

Bytten off more than they can chew?

Beijing-based, Sequoia backed; ByteDance is one of the world’s most valuable technology start-ups. Grey market trading in its shares recently valued the company at $150 billion.

TikTok owned by ByteDance was launched globally in August 2017, and quickly vaulted onto the list of the world’s top 10 apps by downloads in 2019. The app currently boasts over 100 million active users in India alone.

The new national-security law imposed by mainland China will empower police to make internet companies hand over user data.  Bytedance as the parent company of TikTok subsequently announced it would remove the app from the Hong Kong market.

Equivalently the world's major internet and social media platforms have stopped processing requests for user data made by Hong Kong law enforcement authorities while they carry out an assessment of a controversial security law.

It’s potentially a misnomer to label much of the recent action trivially as anti-china given the clear precedent that has been set by Beijing over the last decade which saw access to Google, Facebook et al blocked on the mainland.

‘This has led to understandable outcry over the developments in Hong Kong, which appears destined as the stage upon which a ‘borderless’ digital world will define its borders’

Globally, governments in India and the US have looked to also ban the app amidst growing nationalistic tendencies surrounding recent diplomatic incidents. India has been the first to proceed with a ban; partly antagonised by Beijing in recent Himalayan border clashes but more centrally in response to widespread claims over illegal data harvesting from apps; a well-aired concern in the online world.

As such companies seeking to operate globally have to operate in a dichotomous framework; walking the tightrope of deference to nationalistic home agendas whilst seeking to embrace new markets in global expansion aims. Business models predicated on growth in key emerging markets must be tempered against the opacity of the region of operation and its practices in regard to data privacy.

Tiktok for one is seeking to distance itself from perceived CCP links through exploration of new headquarters in London, Singapore or Dublin. A physical move that is surely negligible in its ability to providing evidence of extrication from the tentacles of Beijing.

It is perhaps ironic that the decisions regarding online freedoms and free expression made post the changes of law in Hong Kong, will reverberate deeply off-line.

A once borderless industry must define its borders.

The clock is tikking... ............................................................................................................................................................................................  

About Fuel Ventures:

  • Fuel Ventures is a leading early-stage technology investor, investing in fast-growth UK and European businesses that have the potential to return between 10x and 100x.
  • Entrepreneurial driven fund led by multi-exit entrepreneurs with £200m+ in exits.
  • An advisory committee with over 50+ years’ experience, and exits totalling £2b+
  • We now have 35 portfolio companies and after only 4 years our first fund has a 7.4X valuation uplift, validated by third-party follow-on investors.
  • We screen 3500+ companies a year using our thorough due diligence processes internally, cherry picking the best 10 companies that have the potential to achieve 100x returns
  • We put a director on the Board of every company we invest in and take an active and hands-on role in the management and development of each company, plus bring added extra value through our network of sector experts.
  • We invest in commercially scalable technology companies, with operating gross margins between 30% - 90%
  • Targeting a minimum of 10x return on investments over a 5-7 year horizon.
  • Generous HMRC EIS tax benefits including 30% income tax relief, 0% capital gains tax on exit, loss relief, and inheritance tax relief for UK taxpayers.
  • We invest in every fund ourselves, with a large 10% personal investment alongside our investors, this is £2,000,000 - £3,000,000 into every fund!
Are you an investor who would like to find out more about Fuel Ventures? Please click here or email guv@fuel.ventures.
Are you an entrepreneur who would like to apply for investment? Please click here.
Back to blog

Recent posts