Venture capital platform Venturecraft will be facilitating the market entry of entrepreneurs and their startup ventures into the mainland Chinese market, according to report in Today Online.
Venturcraft is positioning itself to aid startup ventures from the city-state in establishing a base in the Singapore-Hangzhou Science & Technology Park (SHSTP), for free. The VC supports them with getting working capital and funding, as well as connecting to mentors familiar with the market.
Hangzhou is the origin of Chinese e-commerce giant Alibaba Group, which has eight million residents and hundreds of technology-linked companies. Increasingly, it is apparently being described as the ‘Silicon Valley of China’, emerging as a business cluster that entrepreneurial ventures congregate to enter the mainland Chinese market.
Venturecraft will sign an agreement next month with the Hangzhou government. Under the terms of the agreement, Venturecraft will pay rentals to urban planning and development firm Ascendas, which developed SHSTP, to house startups from the city-state in a nine-storey building at the integrated business park. Each storey spans 25,000sqf.
The Hangzhou government is planning to give grants of up to 11.5 million yuan (S$2.53 million) per venture, Venturecraft said.
Criteria for qualifying involve the founder(s) or researchers of the company to possess a doctorate and possess a high-tech product or service offering that solves a need of the Chinese market, according to Isaac Ho, principal partner at Venturecraft.
In a statement to TODAY, Ho said, “It is the government’s wish to bring in high-quality companies, and ensure the commercialisation of products. Hangzhou is just an hour or two away from Shanghai. It’s also where (e-commerce giant) Alibaba is. The entire belt is one of the more advanced economies, and consumers there are more ready to accept new products from foreign companies.”
Ho added, “Any startup that wants to acquire customers in a Tier 1 or 2 Chinese city should be there.”
Backed by Sun Tongyu, part of the Alibaba founding team, the firm is also seeking to capitalise on Hangzhou’s efforts to develop itself as a ‘smart city’, facilitating the entry of Singaporean firms into the city to bid for the related smart-city projects.
With many Singaporean firms specialising in a single domain or function, Venturecraft plans to bring in several firms that can formulate an integrated solution as a consortium. The Hangzhou municipal government is disinterested in dealing with piecemeal solutions from various vendors.
China wishes to develop a hub that can serve as a legitimate global contender to Silicon Valley, fuelled by an the economic opportunity seen in Alibaba’s initial public offering (IPO), which was worth $25 billion and considered the largest IPO in contemporary times.
Chinese tech companies raised $30.3 billion (S$42.7 billion) through IPOs last year, compared with $4.97 billion for their US-based peers.
Singapore-based organisations and investment entities, such as accelerators, are also seeking to build platforms that can enable the city-states entrepreneurial ventures to engage and enter overseas markets, overcoming the limitations of Singapore’s small market size.
A recent example is the establishment of Block 71 San Francisco, the US version of the startup community in the Ayer Rajah area in Singapore. Accelerators are among the entities that are investigating this space. Venture accelerator Apple Seed has helped startups here pitch to investors in Malaysia and Thailand this year.
Trakomatic, which provides a retail analytics solution for shopping malls, secured a deal with a Bangkok mall as a result of these efforts. These initiatives are part of a broader effort to link entrepreneurial ventures based in the city-state with larger markets and facilitate market entry.
Via these efforts, they can serve a broader array of customers and access a larger pool of opportunities. This is required, due to the constraints imposed on the city-state by its small geographic size and internal market.