Hackerspaces languish due to lack of funds

Some hackerspaces designed to inspire young innovators and entrepreneurs to pursue practical projects have failed to take off, a research report has revealed.

A lack of investment is blamed along with low participation rates and a shortage of long-term members, according to the Development Research Center of the State Council.

The report published on Tuesday was conducted by the council's social research team and ventures, and looked into hackerspaces in the Yangtze River Delta.

Workplaces for computer savvy people, hackerspaces allow young innovators to collaborate on projects ranging from technology to science. They usually combine the Internet with traditional industries such as taxi-hailing mobile apps and online banking.

"People with business plans have the fundamental need to get funding from either credit institutions or government," Zhou Xuanbo, who headed the research team that produced the report, said. "But the current service capability of hackerspaces has been unsatisfactory, especially when it comes to getting access to government support."

In January, Premier Li Keqiang called for an increase in market-oriented and integrated hackerspaces. There are now 72 government-funded ventures in Shanghai.

But the report pointed out that insufficient resources are creating a bottleneck as small startups fail to emerge from hackerspaces.

The solution to the problem would be to establish professional teams of angel investors, according to Zhang Yuchen, professor of business administration at Shanghai Tongji University.

"In Silicon Valley, in addition to the hordes of entrepreneurs, angel investors play a crucial role in getting projects off the ground," he said.

Creating a better link between budding entrepreneurs and investors here will also help.

"Some investors want to fund startups but don't know which channels to go through, while some enterprises need investors but are uncertain about their professionalism," Zhou said. "They need better communication links."

The report also found problems in the industrial supply chain for startups from hackerspaces. They told the research team that suppliers in Jinhua and Yangzhou refused to take their orders because they were considered too small. In the end, they had to turn to a supplier in Shenzhen.

"There is a better supply chain in electronic hardware in Shenzhen because it is a high-tech manufacturing hub," Zhou said. "That means a more competitive price."

But Shanghai should use its position as a financial center to help these startups put together business plans.

There are more than 3,000 financial institutions in the Lujiazui business district.

"If Shenzhen and Beijing offer entrepreneurs support in technology, Shanghai should help them with an integrated business model," Zhang said.