Working in tandem ‘is the best approach to attract startups’
Both the State and the private sector working together makes China an increasingly attractive place to start a business, particularly in the technology sector, according to Sophie Bu.
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, an artificial intelligence startup in Beijing.
“There is a whole ecosystem of the government and the market in China working together,” she said.
“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 in the capital’s Zhongguancun technology hub — often described as China’s answer to Silicon Valley — was founded in December by Li Jiwei, 29, another returnee from Stanford.
Shen Shenjie, 30, who previously worked for a hedge fund in London, and He Haojie, 28, joined in May.
The company, which has 80 employees, of which a third are returnees, uses artificial intelligence to deliver “bespoke financial information” to clients.
Bu graduated in interactive media from Harbin Institute of Technology in Heilongjiang province and also spent four years in Africa — in Kenya and Ethiopia — working on development initiatives before going to Stanford.
She said 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 said.
Shannon.AI secured initial venture capital funding of $3 million and completed a second round of $18 million 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 they are very active,” Bu said.
“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 Towson Capital, an investment and advisory company, and also professor of investment at Peking University’s Guanghua School of Management, said 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 said.
“China startups have to be a lot more ruthless because there are more copycats and dirty tricks. 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, said the dynamism of the Chinese tech sector is beginning to worry the US.
According to a recent report in the Financial Times, US President Donald Trump was lobbied 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,” Li said.
“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.”