Entrepreneur First (EF), the Greylock-backed “talent investor” that recruits and backs individuals pre-team and pre-idea to enable them to found startups, is pulling out of Hong Kong, TechCrunch has learned.
According to sources, the London HQ’d company builder has told provisional candidates for its 2020 Hong Kong cohort that they should instead apply to one of its other international outposts, which includes Berlin, Paris, Singapore, Bangalore, London and (most recently) Toronto.
The immediate Hong Kong operations aren’t changing, however, and the current cohort will complete the program and present at January’s Demo Day as planned. Hong Kong alumni will also continue to receive investment support as usual.
“We’ve decided not to recruit for further cohorts in Hong Kong after January 2020,” EF co-founder Matt Clifford tells me, confirming the news. “There’s no change to the current cohort and we’ll be running exactly the same program for them as for the previous Hong Kong cohorts. We’ll be in Hong Kong at the end of the month to run our investment process as usual and the companies we back will take part in our Demo Day in January as normal”.
Clifford also confirmed that EF had made a handful of early offers to individuals for the next Hong Kong cohort (originally planned for 2020). “We really rate them all, so we’ve offered to transfer their offer to any other EF site,” he says.
As for why EF is pulling out of Hong Kong, Clifford says that although there has been three “good cohorts” in Hong Kong, the talent pool there hasn’t proven big enough to support two cohorts per year “in the long run”. In the first two Hong Kong cohorts, EF has backed around 100 individuals and 11 companies, many of which have gone onto raise external funding.
“The quality is very high, but we need higher volume to make a site work at scale,” he explains. “We’ve always said to our investors that we’ll deploy capital wherever we see the best long term opportunities and, while Hong Kong might well have been viable for another cycle or two, we see more sustainable opportunities elsewhere”.
What Clifford doesn’t mention, of course, is the current political unrest in Hong Kong, which continues to see pro-democracy protests and a subsequent police clamp down. This has included lethal force and the use of controversial “emergency powers” by the Hong Kong administration. Clearly any such climate will make it difficult to attract talent to the country, which a program like EF is reliant on.
Meanwhile, Clifford says there’s no change to the scale of EF’s plans, more broadly. The talent investor still plans to back around 1,000 founders globally in 2020. “We’ve obviously got the Toronto expansion we announced recently coming up and some other sites in the pipeline, so the total number of individuals and companies we expect to invest in remains the same,” he says.
I also understand that the four full-time permanent members of the Hong Kong team have been offered roles elsewhere at EF, meaning that there are likely no net job losses.