Scaling up your business without the big firms like Facebook, Google, Tencent, or Alibaba eating your lunch? Accelerator VC William Bao Bean explains how to survive in a very competitive industry post-Covid-19.
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“The competition from the local players is really intense,” especially at a time of slowing economic growth this year, said William Bao Bean, managing director of Chinaccelerator, one of the most active foreign-backed accelerators in the country, in a recent interview.
To get an edge, more and more multinationals are turning to accelerators and incubators. “When things are going smoothly, you’re not feeling that pressure,” Bean said.
“When you’re under pressure and local players are taking market share from you, you look to innovation.”...
Bean, a graduate of Bowdoin College, knows his way around Asia, having moved to the region in the 1990s. After positions in Deutsche Bank, Softbank and SingTel Innov8, he in 2014 joined SOSV, a venture capital firm that runs accelerators. Chinaccelerator, where Bean is a managing director, provides seed capital and mentoring for globally minded technology entrepreneurs.
The search for innovation solutions helped spawn a Johnson & Johnson incubation facility in Shanghai that opened in June and will house up to 50 startups. It started with 31 resident companies at an event that was attended by Paul Stoffels, the company’s chief science officer.
“Johnson &Johnson has deep roots in China with an innovation footprint dating back nearly four decades,” Stoffels said in a statement. “We are committed to fueling innovation in the region and unleashing the power of science and technology to advance the health of people in China and around the world.”
Sanofi and Microsoft have also been notably active with a similar approach, Bean says. Merck, for its part, plans to open the Merck China Innovation Hub in Shanghai in October.
Yet it’s not only tech and pharma multinationals that are looking for new ideas through startups in China, Bean said. “Consumer brands are really looking for new cutting-edge solutions from startups to help them become more competitiveness versus much stronger local brands,” he said. The consumer-focused companies partnering with startups are no slouches: ABInBev and Unilever.More in Forbes.
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“The best founding teams are like cockroaches, they get stepped on and go crunch a little but then keep on running,” a quote by William Bao Bean, general partner of SOSV and managing director of Chinaccelerator best sums up what make a better startup, and perhaps set it on the road to being a unicorn.
Speaking at the panel session on “What makes a better startup” at WIT Bootcamp 2017 in Singapore yesterday Bao Bean used this example to show the resilience of a startup in Shanghai which, despite a few difficult years on surviving on little income, difficulty in finding investors and a host of other factors working against them.
The question of timing is also important as this startup was five years too early, he added.More in Web in Travel.
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MOX works with startups that make mobile apps and services, and focuses on Southeast Asia, Eastern Europe, and South America.
As it targets mobile app makers, the accelerator has found it has to throw down with Google and Facebook, the two main forces that determine what content floats to the top. “In the US you have the 99 percent and the 1 percent, on the internet you have the 99.9 percent and the 0.1 percent,” says William Bao Bean, MOX managing director and SOSV partner. The latter are the people who make any money on mobile, he adds.
“We don’t even see venture capital backing apps so much anymore because it’s just a money transfer from the VC to the startup and from the startup to Google and Facebook,” William laments.
To break this distribution stranglehold on mobile, MOX is trying to put together a consortium of companies that are feeling the same pressures. This includes companies like mobile phone brands, TV networks, and independent app stores. William isn’t ready to provide more details or name any participating companies at this point.
The accelerator was originally meant to have one more startup batch during summer 2016 but chose to take a break and iron out some kinks.
One key lesson it learned during that process? “When we say low-end phones, they’re really low-end phones,” he laughs. For its first batch, the accelerator wanted to find apps and services that worked on cheaper smartphones – ones more likely to be found in emerging markets, where MOX claims to offer startups access to a user pool of 130 million.
Turns out, they overestimated even those devices. So now, participating startups need to make their apps under 10MB in size, able to work in unstable networks, and more data-friendly.More in Tech in Asia.
William last week at MOX in Taiwan |
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William’s approach to China doesn’t resemble the “import and adapt” strategy attempted by global internet giants like Facebook, Google and Yahoo. Instead of introducing established foreign companies to Chinese market, William believes the key is inviting the innovation process to China. He joined Chinaccelerator, a global venture accelerator based in Shanghai, which helps entrepreneurial teams coming from all parts of the world to take advantage of proximity to the Chinese market.
While China is infamous for copycats, William pointed out that China is also the largest mobile first and mobile only market in the world. There are 649 million internet users in China, and a consumer’s first internet experience is often mobile instead of PC, especially in rural areas.
“Their internet experience is different form someone in Europe and the U.S., so the requirements and the user experience has to be different.”
As a US-born Chinese, William first came to China 20 years ago to improve his language. He started his career as an equity research analyst and then as a technology investment analyst, working for investment institutions like Softbank China & India Holdings and Singtel Innov8, successively. William then joined SOS Ventures, a US$235m accelerator focused venture capital fund, and became the managing director of Chinaccelerator, China’s early-stage startup accelerator...
“I guess the biggest problems that foreigners have when they come to China is that they think their way is right and other people’s way is wrong, and it important to understand there’s more than one way to do things”, said William. A lot of international companies and entrepreneurs come to China, they think they have the solution while in fact the market does not like their solution.
“If one is to succeed in China, the lean startup approach is very important. When you identify a problem, you come up an solution, then you test it in the market, you let the market to validate your idea.”
“In the US, we have three steps in firing at your goals, getting ready is your strategy, aiming-tactics, firing-execution. China places more importance on execution. Their method is running around and see what you hit. Don’t spend all your times on your tactics.”More in TechNode.
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A lot of people around the world are now taking notice of Chinese web giants like Alibaba and Tencent. But China’s startups are generally overlooked and have little chance of breaking out onto the world stage. China’s most active startup accelerator, dubbed Chinaccelerator, is trying to change that. “It’s a bridge, internationally,” says Chinaccelerator managing director William Bao Bean. “It’s the Silicon Valley experience in Shanghai.”
Shanghai is China’s “most outward-facing city,” he adds, which makes it a good fit for the program. But Chinaccelerator, which started in 2009, was initially based in Dalian, up in China’s northeast, not too far from the North Korean border. It headed south to warmer and more cosmopolitan climes earlier this year; the program’s fifth batch of startups, which graduated in May, was its first out of Shanghai. Now it’s midway through the sixth batch as the participating teams build up to the demo day towards the end of November.
“Demo day is not the finish line,” says Bean. He believes that it’s “tough for startups to connect with brands,” even though for many it would be very beneficial to have such strategic partnerships. So Bean and the Chinaccelerator team place an emphasis on helping startups connect with major companies, even long after the startup teams have flown the coop.More in TechinAsia.
