Innovations in China: “bubble” or discipline of startups and competent work of the authorities?
Zack Weisfield, general manager of Microsoft Ventures Global Acpleators, returned from a business trip to China. There he talked with local entrepreneurs, venture capitalists and representatives of the Silicon Valley - Zhongguancun. Weisfield answered one question : is the fast-growing technology market in China a bubble that can burst at any moment?
The trip strengthened Weisfield's belief that China became the hub of fast-growing startups. A few recent examples of this are Alibaba and Xiaomi, which is estimated at $ 45 billion.
Venture capitalists have noted a surge in the market for high-tech companies in China. Every billion billions of companies join the ecosystem each year, with most of them serving local consumers. In 2014, one hundred and seven venture capital deals totaling $ 4.66 billion were concluded in the country, which is slightly higher than the result of the year before last - ninety-eight deals worth 4.45 billion. The capitalists have a “spray and pray” strategy in China: they want to invest in as many startups as possible at an early stage, just to not miss the next billionaire company.
')
The main standoff in China, where any technology is quickly copied and quickly brought to the market, is between giants like Baidu and Alibaba, and small startups are buying in order to accelerate growth, expand competencies, or eliminate competition. This explains the large number of mergers and acquisitions in the technology sector in 2014: 851 transactions for 47.5 billion dollars, which is sixty-two percent higher than 2013 - then 654 transactions were concluded in the amount of 29.3 billion.
One of the venture capitalists, as Zack Weisfield mentions, compared the investment market in China with high-stakes poker: a big risk is a big reward. Seed investment in China is unusually high, ranging from a few million to tens of millions of dollars. There is a reason for this: companies in this country do not have access to developed western infrastructure, so business has to be built from scratch. This requires large investments. At the same time, many Chinese companies serve local consumers, which are easier to satisfy. To their happiness, this is the largest market in the world.
Chinese entrepreneurs are different from Western startups. They are independent, mature and mentally stable. They are called "new entrepreneurs for modern life." They are less creative than their Western colleagues, but more executive. In China, "operators" are now winning, not "innovators".
Weisfield noted the changes in the market made to improve and simplify business. The number of bureaucratic red tape has decreased compared to what it was just a few years ago, and the amount allocated to R & D, on the contrary, has increased. Government agencies have begun to promote private sector business, and also support innovation and growth in the long term.
The Chinese market is hot, companies make billions out of nothing and go for an IPO. Many startups enter the market after the acceleration program, which Microsoft Ventures Global Acceletators has in China.
So, are we dealing with a “bubble”, which at any moment can burst and leave investors without profit and money invested? Zack Weisfield thinks that this is a “mania for opening a business”, but not a bubble. Here, startups invest earlier than usual, and less time passes between regular rounds of investment. But rapid growth requires more funding. Such a pace is unlikely to be sustainable, but we will see many more companies that will change not only the Chinese, but also the global markets.
The trip strengthened Weisfield's belief that China became the hub of fast-growing startups. A few recent examples of this are Alibaba and Xiaomi, which is estimated at $ 45 billion.
Venture capitalists have noted a surge in the market for high-tech companies in China. Every billion billions of companies join the ecosystem each year, with most of them serving local consumers. In 2014, one hundred and seven venture capital deals totaling $ 4.66 billion were concluded in the country, which is slightly higher than the result of the year before last - ninety-eight deals worth 4.45 billion. The capitalists have a “spray and pray” strategy in China: they want to invest in as many startups as possible at an early stage, just to not miss the next billionaire company.
')
The main standoff in China, where any technology is quickly copied and quickly brought to the market, is between giants like Baidu and Alibaba, and small startups are buying in order to accelerate growth, expand competencies, or eliminate competition. This explains the large number of mergers and acquisitions in the technology sector in 2014: 851 transactions for 47.5 billion dollars, which is sixty-two percent higher than 2013 - then 654 transactions were concluded in the amount of 29.3 billion.
One of the venture capitalists, as Zack Weisfield mentions, compared the investment market in China with high-stakes poker: a big risk is a big reward. Seed investment in China is unusually high, ranging from a few million to tens of millions of dollars. There is a reason for this: companies in this country do not have access to developed western infrastructure, so business has to be built from scratch. This requires large investments. At the same time, many Chinese companies serve local consumers, which are easier to satisfy. To their happiness, this is the largest market in the world.
Chinese entrepreneurs are different from Western startups. They are independent, mature and mentally stable. They are called "new entrepreneurs for modern life." They are less creative than their Western colleagues, but more executive. In China, "operators" are now winning, not "innovators".
Weisfield noted the changes in the market made to improve and simplify business. The number of bureaucratic red tape has decreased compared to what it was just a few years ago, and the amount allocated to R & D, on the contrary, has increased. Government agencies have begun to promote private sector business, and also support innovation and growth in the long term.
The Chinese market is hot, companies make billions out of nothing and go for an IPO. Many startups enter the market after the acceleration program, which Microsoft Ventures Global Acceletators has in China.
So, are we dealing with a “bubble”, which at any moment can burst and leave investors without profit and money invested? Zack Weisfield thinks that this is a “mania for opening a business”, but not a bubble. Here, startups invest earlier than usual, and less time passes between regular rounds of investment. But rapid growth requires more funding. Such a pace is unlikely to be sustainable, but we will see many more companies that will change not only the Chinese, but also the global markets.
Source: https://habr.com/ru/post/285772/
All Articles