Hong Kong and Macau Turn to Guiding Funds to Accelerate Tech Development

Multi-billion public funds aim to mobilize private capital and deepen the two cities’ roles in China’s evolving innovation ecosystem.

Across China’s innovation economy, a new financial instrument has been quietly reshaping the venture capital landscape: the government-backed guiding fund. Now, Hong Kong and Macau are stepping into that ecosystem, launching large-scale funds designed to mobilize private investment and strengthen their roles in regional technology development.

Both cities have recently announced multi-billion public investment vehicles aimed at attracting venture capital, supporting emerging industries, and aligning more closely with mainland China’s broader innovation strategy. While guiding funds are already a familiar policy tool across mainland provinces and cities, their adoption by Hong Kong and Macau signals a notable shift in how the two special administrative regions are positioning themselves within the technology economy.

Hong Kong’s move came through the latest government budget, which unveiled a HK$10 billion Innovation and Technology Industry Guidance Fund. The initiative is designed to act as a “mother fund” that will invest in venture funds and technology projects, using public capital to catalyze significantly larger pools of private investment.

Officials expect the fund to mobilize at least HK$40 billion in total investment, with long-term ambitions that could push the investment scale much higher if private participation grows. The focus will be on sectors typically associated with deep-tech innovation, including artificial intelligence, life sciences, semiconductors, and new energy technologies.

For Hong Kong, the guiding fund represents another step in the city’s attempt to evolve from a purely financial hub into a center for technology commercialization and venture capital. In recent years, policymakers have introduced a series of programs aimed at strengthening the innovation ecosystem, from research funding and talent schemes to partnerships with mainland tech clusters in the Greater Bay Area.

The guiding fund model adds a new lever to that strategy. Instead of directly funding startups, the government acts as an anchor investor in venture funds, encouraging private investors to participate while leaving investment decisions largely to professional managers.

Macau’s diversification strategy

Macau has also announced plans to establish its own guiding fund, reflecting the territory’s growing effort to diversify its economy beyond the casino and tourism industries that have historically dominated its growth.

The Macau government plans to allocate roughly MOP 11 billion from fiscal reserves, with the fund expected to expand to around MOP 20 billion once private capital is included. Authorities have indicated that the initiative will support emerging sectors and attract companies capable of contributing to the city’s economic transformation.

For Macau, the stakes are particularly high. The city’s heavy dependence on gaming revenues has long been seen as a structural vulnerability, and policymakers have spent the past several years exploring alternative growth engines. Technology investment, while still at an early stage locally, is increasingly viewed as one pathway to a more diversified economic structure.

A guiding fund could help Macau participate more actively in regional innovation networks, particularly within the Greater Bay Area, where neighboring cities such as Shenzhen and Guangzhou already host thriving technology ecosystems.

The rise of the guiding fund model

Guiding funds—often called “government mother funds”—have become a defining feature of China’s venture capital system. Instead of directly backing individual companies, governments establish large investment pools that allocate capital to venture funds, private equity firms, and strategic technology projects.

The model serves several policy objectives simultaneously. By anchoring private funds, governments can steer capital toward strategic industries while leveraging far larger sums from private investors. The structure also spreads investment risk and relies on professional fund managers to identify promising companies.

Over the past decade, hundreds of such funds have been created across mainland China, ranging from city-level vehicles to massive national funds targeting industries such as semiconductors and advanced manufacturing.

Hong Kong and Macau’s adoption of the model suggests that the approach is expanding beyond the mainland into the broader Chinese economic system.

Strategic positioning within the Greater Bay Area

The new funds also reflect the evolving role of Hong Kong and Macau within the Greater Bay Area, the economic region linking Guangdong province with the two special administrative regions.

In this regional framework, each city is expected to contribute different strengths. Shenzhen has emerged as a global center for hardware and technology innovation, while Guangzhou hosts a broad manufacturing and research base. Hong Kong’s advantage lies in its global financial markets and international connectivity, and Macau has been exploring niches in tourism, culture, and emerging industries.

Guiding funds could reinforce these roles by channeling capital into startups and technology projects connected to the region’s broader industrial ecosystem.

For Hong Kong in particular, the initiative could help bridge the gap between its financial infrastructure and the mainland’s technology sector. The city already hosts a growing number of technology listings and venture capital firms, but policymakers have been seeking ways to deepen its involvement in early-stage innovation.

The move also comes at a time when Asian cities are increasingly competing to attract technology investment. Singapore, for instance, has built a strong reputation as a regional venture capital hub through government co-investment schemes and startup support programs. Mainland Chinese cities continue to deploy large guiding funds to support strategic sectors, particularly as technological self-reliance becomes a national priority.

Against this backdrop, Hong Kong’s guiding fund could help maintain its relevance in the evolving venture capital landscape by encouraging more early-stage and deep-tech investment activity. Macau’s initiative, while smaller, may serve as a signal that the territory intends to play a more active role in innovation-driven industries.

A new phase in regional tech finance

Whether these funds achieve their ambitions will depend largely on execution. Guiding funds can mobilize large pools of capital, but their success ultimately hinges on attracting capable fund managers, generating viable investment opportunities, and integrating effectively with existing technology ecosystems.

Still, the announcements from Hong Kong and Macau illustrate a broader shift. As technology competition intensifies globally, governments across Asia are becoming more proactive in shaping venture capital flows and supporting strategic industries.

By joining the camp of large-scale guiding funds, both cities are signaling that they intend to participate more directly in that transformation—using public capital not only to finance innovation, but also to redefine their place in the region’s evolving technology economy.

Quick Takeaways

• Hong Kong and Macau are launching large government-backed guiding funds to attract venture capital and accelerate investment in technology-driven industries.
• Hong Kong’s HK$10 billion Innovation and Technology Industry Guidance Fund is designed to mobilize significantly larger pools of private capital and support sectors such as artificial intelligence, life sciences, semiconductors, and new energy.
• Macau is also establishing a guiding fund backed by fiscal reserves, with the investment pool expected to expand through private participation as the city seeks to diversify beyond its gaming-dominated economy.
• The initiatives reflect the growing role of government “mother funds” in China’s venture capital ecosystem, where public capital is used to anchor and scale private investment into strategic industries.
• By adopting the guiding fund model, Hong Kong and Macau are positioning themselves more closely within the Greater Bay Area’s innovation economy, aiming to strengthen their roles in regional technology development and investment.