State-pri­vate part­ner­ship seen as at­trac­tive for star­tups

China Daily European Weekly - - COVER STORY - By AN­DREW MOODY

So­phie Bu says the State and the pri­vate sec­tor work­ing to­gether makes China an in­creas­ingly at­trac­tive place to start a busi­ness, par­tic­u­larly in the tech­nol­ogy sec­tor.

The 31-year-old, who has just re­turned from the United States where she stud­ied for an MBA at Stan­ford Uni­ver­sity, is a part­ner in Shan­non.AI, a Bei­jing-based tech­nol­ogy startup.

“There is a whole ecosys­tem of the gov­ern­ment and the mar­ket in China work­ing to­gether,” she says.

“Gov­ern­ment of­fi­cials and oth­ers might not have spe­cific knowl­edge of con­cepts such as ar­ti­fi­cial in­tel­li­gence, but they are will­ing to em­brace new ideas and en­able the tech­nol­ogy to de­velop.”

Her com­pany, which is based in the Zhong­guan­cun area of Bei­jing, which is of­ten de­scribed as China’s an­swer to Sil­i­con Val­ley, was founded in De­cem­ber by Li Ji­wei, 29, who also re­turned from Stan­ford; Shen Shen­jie, 30, who pre­vi­ously worked for a hedge fund in Lon­don; and He Hao­jie, 28. Bu joined in May.

The com­pany, which employs 80, of which a third are re­turnees, uses ar­ti­fi­cial in­tel­li­gence to de­liver fi­nan­cial in­for­ma­tion to clients.

Bu, who orig­i­nally grad­u­ated from Harbin In­sti­tute of Tech­nol­ogy in in­ter­ac­tive me­dia and who spent four years in Africa — in Kenya and Ethiopia — work­ing on de­vel­op­ment ini­tia­tives be­fore go­ing to Stan­ford, says the gov­ern­ment has placed a lot of em­pha­sis on fos­ter­ing a startup cul­ture in China.

“This ex­tends to all the dif­fer­ent prov­inces. There is fi­nan­cial sup­port avail­able, in­cu­ba­tor fa­cil­i­ties and var­i­ous com­pe­ti­tions you can en­ter,” she says.

Shan­non.AI se­cured ini­tial ven­ture cap­i­tal fund­ing of $3 mil­lion (2.6 mil­lion eu­ros; £2.3 mil­lion) and raised $18 mil­lion in a sec­ond round of fund­ing at the end of Septem­ber.

“If you go back 10 years, there were not a lot of VCs in China and no­body had heard of (busi­ness) an­gel in­vestors, but now it is very ac­tive,” she says.

“Now the mar­ket is very fast-mov­ing. There are few places in the world where you can build a new busi­ness and it be­comes vi­able in a short space of time. There is a huge mar­ket here, and it is easy to test busi­ness ideas here.”

Jef­frey Tow­son, manag­ing part­ner of in­vest­ment and ad­vi­sory com­pany Tow­son Cap­i­tal and a pro­fes­sor of in­vest­ment at Pek­ing Uni­ver­sity’s Guanghua School of Man­age­ment, says China now has a stronger en­trepreneurial cul­ture than the US.

“It is the fe­roc­ity of com­pe­ti­tion that is strik­ing. Sil­i­con Val­ley seems slow and sleepy com­pared to dig­i­tal China,” he says.

“Ven­ture cap­i­tal­ists all say that Chi­nese star­tups are more re­silient. They also do not tend to die. If it doesn’t work out, they turn off the heat in the of­fice and try to turn things round.”

Li at Shan­non.AI, who has a doc­tor­ate in com­puter sci­ence from Stan­ford, says the dy­namism of China’s tech­nol­ogy sec­tor is be­gin­ning to worry the US. Ac­cord­ing to a re­cent Fi­nan­cial Times re­port, US Pres­i­dent Don­ald Trump was urged by a se­nior im­mi­gra­tion ad­viser to stop is­su­ing visas for Chi­nese stu­dents to study in the US.

“There is a per­ceived threat that Chi­nese tal­ent en­ter­ing the United States will be bring­ing Amer­i­can se­crets back to China,” he says.

“I have stud­ied in the US and have many Amer­i­can friends. When I re­cently ap­plied for a visa, I found that it was checked (re­ferred) in­stead of be­ing rou­tinely is­sued, which was very un­usual. Oth­ers, I know, have had sim­i­lar ex­pe­ri­ences re­cently.”

Li says it would be bet­ter if there was col­lab­o­ra­tion be­tween China, the US and across the world in new tech­nol­ogy sec­tors.

“Most peo­ple in this sec­tor at­tend con­fer­ences around the world where they share ideas. In an area like ar­ti­fi­cial in­tel­li­gence, how­ever, it would be real hard to cut China out even if you wanted to.”

Bu, mean­while, says the Chi­nese tech­nol­ogy sec­tor con­tin­ues to thrive through a mix of State di­rec­tion with na­tional strate­gies such as Made in China 2025 and the dy­namism of the sci­en­tific and tech­no­log­i­cal com­mu­nity.

“These na­tional strate­gies, com­bined with a vi­brant pri­vate sec­tor, are a very ef­fec­tive com­bi­na­tion,” she says.

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