Born and raised in Hong Kong, Michael Chan — like many other natives in the city — developed a strong passion for railways long before he joined MTR Corporation to lead the local rail giant’s efforts in building an eco-friendly mobility future through investments in technology startups.
Describing himself as “a mobility junkie,” Chan would spend hours roaming around warehouse shops in Tsuen Wan and examining various railway models through glass cabinets. He was also among the thousands of railway fans dashing to board the first train at dawn when a new section of the city’s Mass Transit Railway (MTR) project started operations.
His craze for railways, buses, and basically anything with wheels stretches as far as renting a self-storage unit somewhere in the city to stock all his beloved LEGO train and track sets.
The 42-year-old investor, who previously served as the chief operating officer (COO) at global premium and luxury cars distributor Inchcape Greater China, embarked on a new journey to further his passion for mobility when he came aboard MTR Corporation one year ago to spearhead the group’s investment arm, MTR Lab.
A wholly-owned subsidiary of MTR Corporation, MTR Lab was founded in late 2021 with a mandate to back global startups across six key sectors relevant to the parent group’s operations, including rail tech, Mobility as a Service, new mobility modes, property tech, retail tech, as well as financial and data services.
With an initial capital pool of over HK$300 million ($38.2 million) from its parent, MTR Lab is also tasked with an important mission to help Hong Kong reach carbon neutrality by 2050 amid the group’s emphasis on better serving the city’s commuters and local communities.
“We have a keen interest in bringing the right technologies and partners into the ecosystem,” said Chan, Managing Director of MTR Lab, in an interview with DealStreetAsia. This, he said, differentiates MTR Lab from traditional fund managers who are in the market mainly for financial returns.
A carbon-neutral future
As a priority this year, MTR Lab is actively looking for “good-quality, like-minded” startups and partners through its Co+Lab Initiative, a strategic platform the firm set up in November 2022 to help promote “carbon-neutral smart communities.”
With Hong Kong’s pledge to halve carbon emissions before 2035, Chan saw both “push and pull” factors driving ESG awareness among the local investment community.
He pointed to key driving forces such as government initiatives including the Smart City Blueprint and the Climate Action Plan 2050 as well as the city’s stock exchange operator, Hong Kong Exchanges and Clearing (HKEX)’s, requirement for listed companies to fulfil obligations around ESG disclosure, application, and implementation.
“Investment professionals are actually seeing the benefits of ESG practices beyond their financial value,” said Chan, although it has been tricky for investors to track carbon emissions across different industries.
MTR Lab’s Co+Lab Initiative essentially serves as “an avenue” that enables MTR Lab to directly interact with global startups promoting a carbon-neutral future and “deepen our roots within the startup community,” said Chan.
It adds to the fi rm’s existing cooperation with universities, financial institutions, and local government-backed startup incubators such as the Hong Kong Science Park and Cyberport for deal sourcing and venture building.
Go-to-market strategies
MTR Lab primarily targets early-stage startups with “proven technologies” so that synergies with its long-established parent group can help the businesses in their go-to-market strategies.
“Most startups get stuck at Series B when they already have a proven track record or validated technologies but no avenue to ‘showcase their muscles.’ What they need is a supportive partner who works with them on Series B to bring them to the next stage,” said Chan. “MTR Lab is definitely in a place to help.”
Established in 1975, MTR Corporation is one of the world’s most efficient railway operators that records an average of approximately 4.5 million daily passenger journeys, shows the latest official statistics.
The group operates a network of railway lines and light rail systems across Hong Kong, as well as the Airport Express, a dedicated high-speed link that connects the Hong Kong International Airport to the city’s central business district. It is also the operator of the Hong Kong section of the 26-km-Guangzhou-Shenzhen-Hong Kong High-Speed Rail that allows passengers to travel directly to mainland Chinese cities without interchange.
Additionally, MTR Corporation is involved in a range of businesses, including the development of residential and commercial projects, property leasing and management, advertising, telecom services, and international consultancy services.
Its market cap stood at over HK$234.7 billion ($29.9 billion) as of March 31, 2023. The Hong Kong government is a majority shareholder with a 74.7% stake in MTR Corporation.
Bullish on ESG startups
MTR Lab typically backs startups at their Series A-B funding stage, said Chan.
While it is geography agnostic and flexible in terms of investment size, MTR Lab has “a preference” for startups in the Greater Bay Area in southern China. “We see huge untapped opportunities in Greater China and its GBA…What’s best is to look into our neighbour in mainland China, where a lot of technologies have already been developed,” said Chan.
In one of its latest deals, MTR Lab joined hands with Cyberport to invest in the city’s logistics tech startup alfred24earlier this month.
MTR Lab is most impressed by alfred24’s ESG practices, said Chan, for which the startup is heavily investing in sustainable solutions, such as battery and solar-powered Bluetooth lockers, for carbon reduction in the last-mile delivery sector.
It has also invested in local startups such as Carbon Wallet, a green lifestyle platform that rewards users for their low-carbon habits including waste recycles and MTR rides.
The firm’s current portfolio also covers Mainnovation Company Limited, its joint venture (JV) with AvalonBioMedical that holds intellectual property rights for disinfectant robotics tailored for railway compartments; as well as Urban Access Solutions Company Limited (UAS), which powers Octopus cards with new features like access control and management of payment services – just to name a few.
Octopus cards are contactless stored value cards used across public transport systems as well as everything from convenience stores and supermarkets to bakeries and restaurants in Hong Kong.
To learn more: https://www.dealstreetasia.com/stories/mtr-lab-interview-340769
