A lot of people around the world are now taking notice of Chinese web giants like Alibaba and Tencent. But China’s startups are generally overlooked and have little chance of breaking out onto the world stage. China’s most active startup accelerator, dubbed Chinaccelerator, is trying to change that. “It’s a bridge, internationally,” says Chinaccelerator managing director William Bao Bean. “It’s the Silicon Valley experience in Shanghai.”
Shanghai is China’s “most outward-facing city,” he adds, which makes it a good fit for the program. But Chinaccelerator, which started in 2009, was initially based in Dalian, up in China’s northeast, not too far from the North Korean border. It headed south to warmer and more cosmopolitan climes earlier this year; the program’s fifth batch of startups, which graduated in May, was its first out of Shanghai. Now it’s midway through the sixth batch as the participating teams build up to the demo day towards the end of November.
“Demo day is not the finish line,” says Bean. He believes that it’s “tough for startups to connect with brands,” even though for many it would be very beneficial to have such strategic partnerships. So Bean and the Chinaccelerator team place an emphasis on helping startups connect with major companies, even long after the startup teams have flown the coop.
Startups have short-term goals, but brands have long-term goals. So we set up projects that are short-term where brands can see success quickly – or failure.
That’s all part of ensuring that the startup graduates grow quickly once they’re out the door. “Our focus is around traction,” adds Bean. He runs an ‘Innovation Day’, which is actually open to anyone, to connect Chinaccelerator’s incubated teams to important brands like McDonalds, Sony, Coach, and Chinese dairy firm Mengniu [1].
“Startup language and corporate language are very different. We do the translation,” he adds.
There’s no charge for the assistance to Chinaccelerator’s graduates. The program, which is run by SOS Ventures, invests in every startup, taking a flat six percent equity in return for US$16,000, so it has an interest in seeing the young businesses gain traction, make partnerships, attract users, and eventually churn out a profit. If they survive.
Where are the incubators?
Bean is new to Chinaccelerator, taking over the top spot this week from co-founder Cyril Ebersweiler. It coincides with Bean (pictured below) joining SOS Ventures as an investment partner for Asia. He departed SingTel Innov8 for this new role.
SOS Ventures runs five other accelerators besides Chinaccelerator, including Shenzhen-based HAXLR8R, which focuses on hardware startups. While Chinaccelerator specializes in web startups, they both share the idea of connecting Chinese startups to the world, and both also host a number of overseas teams that set up base in China.
The new MD points to Orderwithme as the most high-profile and successful of Chinaccelerator’s graduates. It makes use of China’s manufacturing firepower to offer wholesale group buying for small businesses. After the team’s stint at Chinaccelerator in late 2011, the startup crew quickly – in literally just two weeks – went on to win Techcrunch Disrupt in Beijing. Investors have so far ploughed in US$9 million into Orderwithme, and it eventually relocated to Las Vegas to be closer to its customers.
The Orderwithme team, originally based in Hangzhou, Alibaba’s picturesque hometown, relocated to Las Vegas, explains Bean, as they were lured by Zappos’s Tony Hsieh and his drive to turn Las Vegas into a new startup hub.
Orderwithme was founded by American husband and wife team Jonathan and Danielle Jenkins, who were inspired by Alibaba to create a similarly open marketplace model for US businesses. While it’s quite rare for foreigners to create tech startups in China, it’s a much more common sight at Chinaccelerator, which includes a number of nationalities as well as numerous overseas Chinese entrepreneurs.
While the diversity is welcome, it also points to the issue that there are too few tech accelerators in a country of China’s size, which still leaves Chinese entrepreneurs under-served. While there are young and dynamic venture capital firms in China that place an emphasis on mentorship, such as Lee Kaifu’s Innovation Works, there are no major, domestic incubators held on a regular basis.
Nonetheless, Chinaccelerator manages some balance. It has graduated some purely local startups, such as Neonan, a men’s health portal with a smidgen of Buzzfeed thrown in, as well as ones that perfectly fit its billing of bridging China and the rest of the world – such as NYCareerElite, which connects Chinese youngsters with work experience and internship opportunities overseas.
A couple of startups from its most recent batch have been even more forward thinking in ditching the usual ‘iOS or Android’ paradigm and instead developing services that work within WeChat, the messaging app that’s hugely popular in China. One of those, Giftpass, allows you to gift items from participating retailers to buddies within WeChat.
Bean says that WeChat is “China’s biggest mobile ecosystem,” so it makes sense that startups are now building for such platforms rather than simply making a standalone app. He expects to see more of this in future as startups build on top of WeChat, Line, or Alibaba’s shopping sites. In other trends, he expects to see more Chinese startups following local tech giants like Xiaomi, Baidu, and Tencent in expanding to promising markets across Southeast Asia and East Asia, such as India and Indonesia. And, in good news for Chinese startups, he anticipates that China’s tech titans will finally become more active in terms of funding and acquisitions.
We’ll see what Chinaccelerator’s newest batch has cooked up next month.
You might remember Mengniu from such scandals as the time its tainted milk hospitalized an estimated 54,000 babies with kidney stones, or the time its baby milk formula resulted in 13 infant deaths from malnutrition. ↩
“It’s the Silicon Valley experience in Shanghai”
