New Opportunities for Internet Startups

By+staff+reporter+JIAO+FENG

ON June 12， Zhongguancun opened its first “innovation street” in Bei- jing. Known as Inno Way， the neighborhood has attracted a range of service institutions， all geared to helping fledgling businesses get a head start. Dozens of service institutions have already made Inno Way their homes， including Garage Coffee， Legend Star， Innovation Works and 36 Kr.

A confluence of scientific talent and researchers， experienced investors and service providers， Zhonguancun features a rich environment for startups and innovative businesses. One third of Chinas annual startup investments go to Zhongguancun， making the place a haven for enterprise and creativity.

Hotbed of New Businesses

Starting a business is a daunting task. Under current Chinese laws， founding a company requires a fixed office site， insurance， registration and reams of paperwork. In Zhongguancun， however， new service institutions are making the process easier for new business owners. They rent out desks that can be registered as the office address for a company， saving startups expense in rental and utilities， and offer expert services to help new entrepreneurs navigate paperwork and bureaucracy.

Virtue lnno Valley is one of the incubators which helps new businesses enter the mobile Internet and cultural industry. Hidden away on the eighth floor of a building in western Zhongguancun， Virtue Inno Valley aims to provide services and capital support for startups in order to accelerate their growth. In the spacious， 2，000-square-meter open-plan office， young business pioneers fill all 240 workspaces. General Manager Liu Xiaofan told China Today that his office is home to more than 140 new enterprises.

“The monthly rental for one workspace is RMB 1，500 covering water， electricity and Internet， making our office ideal for nascent enterprises，” Liu said. For a team with three to five people， rental for office seats is only RMB 4，500-7，500. Apart from the public facilities， Virtue Inno Valley also provides startups with operation support. “We assist these business teams in industrial and commercial registration， provide free cloud services and administrative solutions covering financial， legal and other affairs. We also offer free in-depth consulting， allowing startups to concentrate on their projects. These supportive services save startups money， resources and energy，” Liu added.

Wang Hongwei， founder and CEO of Beijing Auto Brilliance Information Technology Co.， Ltd.， moved his team to Virtue lnno Valley in March. Before that， his business shared a residential apartment with two other businesses. “The biggest problem was that there were not enough bathrooms for a dozen people on three teams，” Wang said. “Moreover， it was hard for us to recruit new employees in that environment， especially women. Sometimes girls would cancel their interviews because they didnt want to work crowded together with a dozen men.” After moving to the current venue， his business recruited four new employees. “Now we are in Zhongguancun， people consider our business more respectable，” Wang said.

Service Fuels Startup Development

Attracted by the collaborative advantages of Virtue lnno Valley， Fu Xing， founder of Beijing ANPPLE Technology Co.， Ltd.， decided to settle his team there. “We moved in in 2013. Virtue is a professional incubator for startups working in mobile Internet， which is what drew me. Since all tenant companies work in largely the same realm， we can compare notes and learn from one anothers experiences. As an incubator， Virtue also helps us find clients and investors，” Fu said.

Liu Xiaofan said that traditional incubators usually gain profits through rentals. Virtue lnno Valley， however， sublets its space at a 40 percent discount. It is devoted to providing value-added services for entrepreneurs and finding needed resources for them. When their products are put online， the innovation valley also helps tenants find marketing partners and investors.

“Capital and market guidance are what startups need most. The innovation valley has 100 quality mentors for technology， media and telecommunication to help startups to take up projects and speed up their development，” Liu said. In addition， it also established a fund of RMB 10 million to provide startups with seed capital.

Fu Xing benefited from Virtues services. “The innovation valley has unrivalled advantages compared with other incubators， thanks to the targeted and practical mentoring by its team of highly competitive professionals.”

Liu added that these mentors include experienced investors and seasoned entrepreneurs as well as senior experts with deep understanding of Internet industries. These people are willing to provide their expertise， share their experiences and help nurture the startups. Business teams， the innovation valley and mentors are bonded together with common interests. The startup incubator provides funds and space， and mentors lend their support through their experience and resources.

37mhealth， another tenant at Virtue， was founded by graduates of the Beijing University of Aeronautics and Astronautics. In the beginning， it developed intelligent hardware， including a blood pressure management device. After setting up shop at Virtue lnno Valley， their innovation mentor suggested an adjustment in their development direction. After shifting to cloud services， the company has undergone rapid growth. It received RMB 200，000 in seed capital from the incubator and a further RMB 10 million from investors.

Last February Virtue lnno Valley reached an agreement with Wayra， a subsidiary of Telefónica， which gave all startup teams at Virtue access to Wayras global innovation network.

A New Upsurge for Internet Innovations

With the rapid rise of telecommunications and smart phones， the mobile Internet is flourishing. In June 2012 more than 388 million Chinese used mobile devices to access the Internet， for the first time in history exceeding those who used computers – an epoch change in Chinas Internet industry.

Wandoujia （peapod）， an app for Android smartphones， is the first product incubated by Innovation Works， another startup hatcher. It is used to facilitate data transmission from PCs to phones. Formally launched in 2010， the app now boasts over 300 million users with 800，000 or more new users every day.

Baozouwuxia， a popular online game， is produced by KOD Games， based in Virtue. After moving into the innovation valley the company got funding from Li Zhu， executive director of Virtue and cofounder of Innovation Angel Funds. Today KOD has an estimated market value of over RMB 100 million.

“Now the Internet is greeting the third startup wave. Only in this era can dreams turn into reality，” Fu Xing said. Many startups in an incubator have witnessed their peers ascend to billionaire corporations over a few years. These cases serve as an exemplary model for Fu and other pioneers in the field， and spur them to seek their fortunes.

With the business environment constantly improving across China， valuable opportunities for business pioneers are emerging. Jumei.com was first established in Zhongguancun as an online shopping mall for discounted cosmetics. After investments from angel investor Xu Xiaoping and Sequoia Capital， it rose to Chinas No. 1 online cosmetics retailer over three years， with a monthly revenue of RMB 600 million. On May 16， 2014， Jumei.com was listed in the New York Stock Exchange with a market value over US $3.5 billion.

This serves as a vivid illustration of the astonishing potential for enterprises in the Internet era. A big dream can easily come true.