Just the start of something big in China
For far-sighted entrepreneurs and tech start-ups, Beijing is a hotbed offering angel investors the opportunity to hook up with companies that can match their ambitions. It is a fiercely competitive market — but a hugely exciting one. Daniel Bardsley, Foreign Correspondent, reports
Coldplay is on the stereo in the background, a dartboard is nailed to the wall and a basketball hoop attached to the ceiling. The office of Wodache.com, a car-pooling website, certainly fits the stereotype of a Silicon Valley tech start-up.
All that is missing are a couple of beanbags and a Nintendo games console. But this is not northern California - this is Beijing, a city dubbed the Silicon Valley of Asia as ambitious entrepreneurs, angel investors and venture capitalists pile in to take advantage of the opportunities offered by the world's second-biggest economy.
The three Chinese-Americans behind Wodache gave up good jobs or high-level studying opportunities at home to move here.
"I met these two great guys who are crazy enough to try out a crazy idea - to use social car pooling to solve the traffic and pollution crisis in China," says Jeff Hsu, 23, the co-founder and chief technology officer.
"That sounded a lot more interesting than going back to the States for my PhD."
But there are major challenges. One of them is that in this "very competitive" marketplace others will steal your idea and even your website design and functions. One report last year revealed 4,000 group-buying sites sprang up in China in the space of a 12 months, and they are all looking for the next big thing to hit cyberspace.
Then there are the problems of Chinese bureaucracy and staying on the right side of the law. For Wodache - whose other co-founders are Eric Wang, 26, a former New York banker, and James Hu, 28, a former Microsoft employee - that meant hours of research and amending the services they were offering to ensure they did not breach local regulations.
With limited resources, they are based in a modest residential flat in the east of the city with a small team of staff and interns. They plan to go live later this month.
"[Beijing] is the biggest start-up hub outside the [Silicon] valley," says Mr Wang, the chief executive. "You have giants like Tencent, Baidu. It's the only area outside the valley where you have multibillion-dollar technology companies. It's exciting, but very challenging."
There are scores of tech industry start-ups in Beijing, many involved in areas such as social networking and mobile phone applications. In a country with more than 500 million internet users and 1 billion mobile phone users, according to official data last month, the sky is the limit.
Up-and-coming sites singled out for praise by Web analysts have ranged from online dating to e-learning, and video-sharing to car rentals.
Yet the opportunities are such that China is attracting entrepreneurs in an array of fields outside the tech industries and some, such as Larry Wang, 52, are already established outside the mainland. Mr Wang describes China as "the mother of all entrepreneurial markets".
Also a Chinese-American, he set up his human resources company, Wang and Li Asia Resources, in Taipei in 1994 and later opened a Hong Kong office. In 1999 he entered the Chinese mainland, which now provides more than 95 per cent of the company's business. There are 45 people at his offices in Shanghai, Beijing and Shenzhen.
He says part of the attraction of China to entrepreneurs is the scale, which "doesn't compare to Taiwan or Hong Kong". Then there is the almost limitless potential of a market still in its early stages.
"The market is less developed, less mature," he says. "There's more opportunity, more room to be a pioneer and a potential leader in what you're doing."
Indeed Dong Lu, 39, the Chinese entrepreneur behind La Miu, an online lingerie brand that launched in 2008 and now employs 150 staff, has admitted he would have had a much tougher time in many other parts of the world.
"It's like maybe the 1970s in the United States. There's a lot of growth potential," he says. "Competition is less severe … In the United States or Japan it's much more sophisticated. It's full of good marketing people, good product people."
Mr Dong, who spent a decade in Japan and has a degree from the US, hopes to hold an initial public offering (IPO) within about three years as part of expansion plans that include taking over local brands.
For others an IPO is a long-distant dream, yet for such early-stage start-ups there are plenty of places to turn for assistance.
Special event weekends offer the chance to meet investors, while Chinaccelerator, based in the north-eastern coastal city of Dalian, is always on the look out for new ventures. The company usually covers early operating costs and development, and connects companies with mentors and new funding.
Many investors looking at Chinese start-ups are from overseas.
In Beijing, there is Innovation Works, started in 2009 by Lee Kai Fu, the former head of Google in China, with the aim of helping technology start-ups. When he began Innovation Works, Mr Lee said inadequate management experience, coaching, networking and funds from venture capitalists were holding back Chinese start-ups.
Among the others helping entrepreneurs get their ideas off the ground is Richard Robinson, 44, from Boston, the co-founder of the Beijing chapter of the Entrepreneurs' Organisation.
A successful entrepreneur himself - in China he co-founded Mobile Interactive Games, which was bought by Glu Mobile for US$40 million (Dh146.9m) in 2007 - Mr Robinson acts as one of Chinaccelerator's mentors.
While there are plenty of events, seminars and mentors for start-ups, Mr Robinson says there are fewer angel investors than in other markets. But that is changing fast.
"A lot of it is insiders that are cashed out and have the ability to invest," he says.
Venture capitalists are also increasingly willing to put funds into China, says Mr Hu.
"There are some venture capital firms that have more partners here than in their Silicon Valley offices," he says. The three entrepreneurs at Wodache have staked their futures on their venture.
"It's about not being slaves to corporations and creating our own future, a future of opportunity and potential to help society. That's the passion. That's what helps us wake up early and work late," says Mr Hsu.
His co-founder Mr Wang says the aim is to "create a great company along the lines of Apple or Facebook or Microsoft". And he thinks China is the place to try to achieve this.
"That's our life goal. The market is right here," he says.
Updated: April 2, 2012 04:00 AM