Draper Dragon Partner Larry Li on Hong Kong’s Role in Global AI — and Two Emerging Opportunities in Token Exports and Optical Interconnects

Larry Li, Partner at Draper Dragon

As the global AI race moves beyond model development toward infrastructure, cost efficiency and commercial deployment, a new set of opportunities is emerging at the intersection of technology and cross-border markets. For Hong Kong, the opportunity may lie not only in attracting AI companies and capital, but also in connecting China’s technological strengths with global demand.

At the CDDJAP 2026 Summer Cohort Launch Ceremony, Larry Li, Partner at Draper Dragon, outlined two areas he believes deserve particular attention: bringing Chinese AI capabilities to global markets through “token exports,” and capitalizing on the next generation of optical interconnect technologies. His perspective reflects a broader investment thesis: Hong Kong can serve as a strategic bridge connecting innovation, capital and commercialization across markets.

The address was delivered at Cyberport 3, Hong Kong, during the launch ceremony co-hosted by CDDJAP, Draper Dragon and Starlabs Consulting under the theme Where Capital Meets Intelligence. Read our [full event recap].

Hong Kong’s Strategic Role in the Global AI Ecosystem

In his address, Larry Li highlighted Hong Kong’s growing importance as a bridge between China and global markets, particularly as artificial intelligence reshapes the technology and investment landscape. Drawing on Draper Dragon’s experience investing in early-stage companies, he identified two emerging opportunities for Hong Kong: exporting AI capabilities and tokens to global markets, and capitalizing on the next generation of optical interconnect technologies.

He also explained the strategic thinking behind CDDJAP, which aims to connect innovation from Silicon Valley with China’s strengths in product development, commercialization and cost efficiency — using Hong Kong as a platform to bring these capabilities to global markets.

Why Hong Kong Matters in the Global AI Ecosystem

Two years ago, we partnered with Cyberport to launch the CDDJAP accelerator. The initiative builds on the university, accelerator and incubator networks we have developed over many years in Silicon Valley. While fund management is our core business, our experience investing across multiple market cycles has led us to a clear conclusion: incubators are an indispensable part of the technology innovation ecosystem.

I also want to emphasize the importance of Hong Kong’s role as a bridge and gateway in the current international environment. The performance of Hong Kong’s capital markets over the past year has been notable, and the growing number of AI companies coming to Hong Kong further underscores the city’s significance.

AI is currently one of the hottest sectors in Silicon Valley and global markets, attracting substantial capital. In markets such as Taiwan, Hong Kong and South Korea, AI-related listed companies account for significant proportions of major market indices — in some cases, 50% or even 70%.

As an investment firm focused on early-stage companies, we see two particularly compelling opportunities in Hong Kong.

Opportunity One: Taking AI Tokens to Global Markets

The first opportunity is what I call “token exports” — bringing AI capabilities and token generation to global markets.

Across the AI industry, Japan is rapidly increasing its investment in computing power, while Europe is working to catch up. China and the United States, however, continue to have a substantial lead in computing infrastructure over other markets.

The emergence of products such as DeepSeek and Kimi has prompted the market to recognize the cost and efficiency advantages of Chinese AI models in generating tokens. If exporting computing infrastructure faces constraints, exporting the output and capabilities of AI models presents another possible path.

This is where Hong Kong has a distinctive opportunity. It can serve as a platform through which Chinese AI capabilities reach international markets, creating new possibilities for commercialization and cross-border collaboration. In my view, this is one of the major opportunities emerging right now.

Opportunity Two: The Next Generation of Optical Interconnects

The second opportunity lies in the optical interconnect industry.

AI computing centers depend on optical interconnects to support the movement of data. In the first generation of this technology, major listed companies such as Innolight have already made their way to Hong Kong.

We are now entering the era of optical interconnects 2.0, with a new generation of technologies beginning to emerge. China’s industrial supply chain accounts for a substantial share of this ecosystem.

We have recently participated in several projects developing key components for OCS 2.0, or the second generation of optical circuit switching technology. These innovations are designed to serve global markets, and companies developing them may need an international presence or an entity established in Hong Kong or elsewhere outside mainland China.

This creates another important opportunity for Hong Kong: helping innovative companies connect with international markets and build the structures needed to serve them.

Connecting Silicon Valley Innovation with China’s Commercial Strengths

Innovation flows in both directions between China and the United States. Silicon Valley has long been a source of new business models, and the next phase of AI development will be defined not only by large language models themselves, but also by how these models are applied in the real world.

We already know that large language models can perform well in enterprise applications, but this is only the beginning. There are many more possibilities ahead as AI moves from model development toward broader commercial adoption.

That is one of the objectives behind our accelerator: to bring promising ideas from the United States to Hong Kong and help them find opportunities for application in mainland China.

Chinese companies, meanwhile, have demonstrated considerable strengths in productization, operational efficiency, cost control and commercialization. By combining these strengths with Hong Kong’s international connectivity, companies can build products and services that are competitive in global markets.

This is the strategy we have consistently pursued. We believe Hong Kong has a distinctive role to play in connecting different innovation ecosystems, and our team has invested considerable time and resources in the city over the past several years.

We are delighted to see founders, investors and builders becoming part of this ecosystem and participating in the opportunities it creates.