'Chinese mainland magnet for startup entrepreneurs'
Updated: 2018-04-14 06:19
By Luo Weiteng in Hong Kong(HK Edition)
China has been a growth story for 40 years and the economic powerhouse's rise in the global startup scene has made it a magnet for startup founders - or founder-wannabes - the world over.
Behind the glory of "making it" is a turf war between the Chinese mainland's cash-rich conglomerates, which use their deep pockets to snap up promising startups and guard against potential disrupters.
In the latest corporate battle, one of the nation's fast-emerging bike-sharing firms Mobike was bought by Meituan Dianping, the mainland's largest provider of on-demand online services, in a deal worth $2.7 billion - excluding debt.
"Just like in China, there is a lot of talk in Israel about abandoning the dream that an up-and-coming startup can topple a gargantuan company," says Yossi Vardi, chairman of Israeli hi-tech investor International Technologies.
"But I think conglomerates toting their big checkbooks everywhere just offer startup founders an option to make an exit," he told China Daily.
The veteran Israeli entrepreneur and investor believes startups and big businesses should find their own places properly and differently in a vibrant startup ecosystem.
"Not all young entrepreneurs start an undertaking as a lifelong endeavor. Not all startups aim to grow high into skyscrapers someday," explained Vardi.
"They should be allowed to take investments from behemoths like Tencent and Alibaba, and even become part of their all-encompassing investment empires."
He said it might remain a matter of debate whether buying sprees by bigger companies could help big players and their investment targets become better businesses, or it would essentially make most startups become short-sighted, so much so squash competition and stifle innovation.
As tech giants in the world's second-largest economy take the investment splurge to a higher level, their forays virtually turn technology investing into a numbers game.
A company founded just less than two years ago, Mobike, was given an enterprise value of $3.7 billion through the deal with Meituan Dianping. Its major rival Ofo is said to have a valuation of far more than $3 billion. This makes it the world's most valuable unicorn - a term for a startup valued at $1 billion or more.
Vardi said the logic, if any, behind the record-high valuations of the tech companies might lie with the compelling stories their founders tell investors.
"Investors lose no time to plow money into the most-promising companies, usually in a fear that if they do not follow suit, they may miss the boat," he said.
"Driven by the belief that their investments will pay off, they cannot afford to miss out on the potentially huge opportunities ahead. Such a mentality may explain the money-burning stories in the startup scene."
Vardi said he values the people behind the startup more than the compelling idea it tries to deliver.
"What matters are the people who will execute the idea. They are the most valuable asset to the startup," he said.
"Moreover, since the team is poised to work with investors like me for years, good character is also a major consideration."
(HK Edition 04/14/2018 page9)