The Hong Kong University of Science and Technology helps launch 100 spinouts a year. But the AI rush means it has to get them overseas quicker, says its tech transfer head.
The Hong Kong University of Science and Technology (HKUST) — famous for spinning out consumer drone company DJI — is looking to launch more of its robotics and deep tech spinouts into international markets, by partnering with VC firm Gobi Partners to run its new HK$500m ($64m) fund.
The fund has been set up to back startups spinning out of the university through later funding rounds and to support their entry into overseas markets.
“As time goes on, our startups have moved from seed to series A, series B and series C stage, so the individual companies’ investment needs are increasing,” says Dr Shin Cheul Kim, HKUST’s associate vice-president for research and development. “At the same time, the global [reach of the] companies is also increasing.”
HKUST launches about 100 spinout companies a year and has spun out some 1,900 companies in total to date.
The Gobi-Redbird Innovation (Gobi-RIF) Fund was launched last month in partnership with venture capital firm Gobi Partners and the local government-owned Hong Kong Investment Corporation. The fund is the latest part of the HK$2bn Redbird Innovation plan framework formed by HKUST in April 2024 to support its spinouts.
Kim (left) says the university launches about 100 spinout companies each year, with between 20% and 30% founded by professors and the rest by students and alumni. The Redbird programme aims to not only back those startups at the beginning of their journey, but to support them as they grow, through funds formed with external general partners.
The first such vehicle was a biotech fund formed with health tech investment firm Shanghai Healthcare Capital (SHC) last year.
Gobi-RIF on the other hand will focus on a number of areas, including biotech, fintech, industry 4.0, artificial intelligence and robotics. Although Gobi doesn’t have the same in-depth sector expertise as Shanghai Healthcare Capital, the firm brings in deep tech experience and a wealth of international contacts.
“It’s not just the money, they have a network and an expertise and understanding of deep tech startup companies,” Kim says.
“We are looking for a partner that can steer our professors in the startups to establish a proper business setup, which leads to the market and to manufacturing. Gobi has that capability, and Asia network-wise, they are an international fund, it’s not just a local Hong Kong fund. That is another benefit, they can provide entry into other markets.”
Robotics and AI mean big challenges and perhaps bigger rewards
Some 1,900 startups have spun out of HKUST, according to Kim, with DJI among the most famous. Kim says the university is particularly strong in mechatronics, a field of study that integrates mechanical, electrical and computing technology in equipment such as drones, and in robotics and AI. Those fields, he adds, are boosted by HKUST’s geographical position in China.
“This area – Hong Kong, Macao, Shenzhen, Guangdong, what we call it the Greater Bay Area – is the best place when we deal with the convergence of robotics and AI,” he says.
Much of the western venture funding that has streamed into AI in the past three years has concentrated on software, more specifically the large language models (LLMs) underpinning OpenAI and Anthropic’s offerings. But in China the focus has been more on embodied intelligence – the integration of AI and the physical world, in the form of intelligent robotics.
Kim says this is a far larger challenge. LLMs are an “easy toy” in comparison, because they can be trained on data that is already available, while embodied intelligence is far more complex, relying on constant interaction with the outside world. You still can’t ask a robot to put its metal hand in your pocket and retrieve the second biggest coin, he adds, because you would need to a) identify and define the necessary datasets, b) install the right sensor to find the coins, and then c) connect it to a physical system capable of processing everything.
The rewards of robotics investments, however, are potentially large, Kim says, especially when you combine it with industry 4.0 technology that can transform manufacturing. Robotic arms have long been used in car assembly lines, but humanoid systems are now being installed that can carry objects while being controlled by human operatives.
Add the right level of intelligence and extend the technology to something like hospitals or elderly care, and you could have robots that escort patients to the bathroom and help them physically rehabilitate, tasks that could prove crucial in societies with ageing populations and staff shortages in fields like nursing.
These markets are moving extremely quickly, and this links into the reason that HKUST wants a partner such as Gobi, which was founded in China but operates as a pan-Asian firm with offices in nine countries including several of Asia’s largest markets. The hope is that it will be able to help Gobi-RIF Fund startups to find local partners and potentially investors.
“In many cases, the Chinese market is a wonderful place to test the market because, in terms of manufacturing, the value chain is already established,” Kim says. “So, if you have an idea, you can make a product, test it in the Chinese market first and then expand to other territories.
“But this mechanism is a little bit traditional, because [with AI technology] we have to get to the market [quickly], because the lifetime of the AI product is short term. So, we try to go into multiple sectors and territories more or less at the same time, and so we need those kinds of network partners.”
There will be other Redbird funds too, Kim says, and that could even mean a corporate VC partner. The university is keen to link deep tech startups to corporate venture capital units, as their needs can be a window into their markets and the needs of customers, and that can lead to licensing deals or acquisitions. The only remit for future partners, he adds, is that they align with HKUST’s mission.
If you invest in university spinouts, we would love your input in GUV’s University Venture Funds survey.
Gain valuable insights into the performance of university-affiliated funds globally. Compare your fund’s structure and performance with your peers. Take the survey here.
