Funding proves major problem for startups

Young entrepreneurs gather at an entrepreneurship club in Zhongguancun, Beijing, April 1, 2015. [Photo/IC]

Lai Shenzhong has been turned down again－the third time in a week.

The 32-year-old entrepreneur has been trying to find investors who will pump around 500,000 yuan ($77,639) into his high-end tourism mobile app service.

"They (investors) are interested in the idea, but most of them have already invested in the online-to-offline tourism sector," he said. "They worry about conflicting interests if they pour money into us."

Lai returned to China in 2014 after working for a Caribbean cruise company for five years. In April, he set up Beijing Traveling Agent online and moved into the crowded Internet tourism sector.

Raising cash has been a major problem. "To be honest, we missed the best time for online tourism investment," he said. "During the past five months I have had to live off my savings."

"Now, I'm in desperate need of money to market and promote my app," he added.

Finding funding is the biggest headache entrepreneurs like Lai face. Among the 30 budding businessmen that China Daily interviewed in Beijing last month, 60 percent of them cited investment as the key issue.

"Despite the influx of investment from the real estate sector and government funding, the supply of money still fails to meet the huge and growing demand for financing," Zhang Kai, general manager of the Beijing branch of Techcode, a company that specializes in helping startups, said.

More than 570,000 people, aged between 18 and 40 years old, started businesses in the Chinese capital by the end of 2013, according to data from Beijing Administration for Industry and Commerce.

But that figure only reflects half the story as analysts point out that the number of new entrepreneurs has surged in the past year as they ride the online innovative wave.

In Beijing, Zhongguancun Science Park, which is commonly referred to as China's Silicon Valley, has more than 13,000 tech companies. According to data from the park, Beijing creates more than 120,000 startups every six months.

"Financial problems are affecting grassroot entrepreneurs who have limited resources in Beijing," Zhang added.

Xiang Liang falls into that category. The 28-year-old came to Beijing in April after dropping out of a startup team in Wuhan, capital of Hubei province.