Chinese tech startups optimistic about coming year

Chinese tech startups are optimistic about business conditions in the year ahead, despite the country's slower economic growth and market volatility, a new report said on Tuesday.

The report, jointly released by Silicon Valley Bank and its joint venture SPD Silicon Valley Bank, was based on 140 responses from executives at Chinese technology and life science startups.

"Eighty-five percent of companies we surveyed said they expect the business conditions in 2016 to be better than that of last year, higher than the 64 percent in the US and 58 percent in the UK," said Dave Jones, president of Silicon Valley Bank Asia.

According to him, the higher percentage of confidence in China is due to the fact that they are confident about the country's economic prospects and optimism is part of being an entrepreneur.

Though 81 percent of entrepreneurs said the fundraising environment is extremely or somewhat challenging, roughly the same level as their counterparts in the US and UK, the report finds that 38 percent of them still believe venture capital will be the next source of their funding.

But the attitude toward mergers and acquisitions is one of the biggest differences between Chinese entrepreneurs and their western peers, Silicon Valley Bank found.

Over 62 percent of Chinese startups said they will go public, with only 5 percent saying they will be acquired. This is in sharp contrast to the US and UK where 60 percent of entrepreneurs said acquisition will be their long-term exit strategy.

Wang Qiang, co-founder of Chinese venture capital firm Zhen Fund, said the big difference reflects that the entrepreneurial culture is still not mature in China.

"Many Chinese entrepreneurs believe they can achieve their dreams with their first try. They are not willing to give up until their companies get listed on the NASDAQ. But the reality is harsher."

"While in the US, people believe once their companies are acquired, they can get money to work on their next projects," Wang said.

According to him, as more mergers occur in China's Internet sector, entrepreneurs will get used to the fact that being acquired is, in fact, also a good result for their companies.

Last year, a string of eye-catching mergers made headlines in China. Chinese car-hailing platforms Didi and Kuaidi merged in February, followed by the teaming-up between Meituan and Dazhong Dianping, two companies that offer a wide range of similar services such as group-buying, selling movie tickets online and food delivery.