The Chinese government has released a fund amounting to 60 million yuan, aimed at supporting small and medium sized businesses. The fund will be used to buy shares in #startups so as to help them solve the dual challenge of getting money to start and expand their businesses.
Most startups face the challenge of inadequate financing and human resource during the initial stages – something that paralyzes their operations and growth potential. A large percentage of these companies never grow to become sizable firms but instead collapse when things get tough. This fund will directly solve such challenges by making the required capital easily accessible.
This fund is going to act as a great source of motivation to startups in their initial phases and for those that are yet to be established
More than 3.6 million new companies were established in #China in 2014, which is a 46 percent increase compared to 2013 data. This shows the level of interest that Chinese people have in doing business. This fund is going to act as a great source of motivation to startups in their initial phases and for those that are yet to be established. Besides the government’s fund, there are also several other #private equity investors and venture capitalists who are investing their money in startups.
A large percentage of that money is directed through the Shanghai Technology Entrepreneurship Foundation. The foundation has supported at least 12,000 startups and of those, two-thirds have been unsuccessful. Most of the startup companies are launched with big ideals, but when they encounter real market situations characterized by stiff competition and low and fluctuating market demand, they find that they are very far from achieving their expectations. There is therefore always a gap between #entrepreneurs’ expectations and what is possible to achieve in reality. Thus, it is still very important to provide money to these startups so that they can get started by bringing their ideas to the market.
In addition to funding support, startups are also recommended to seek partnerships with some of the leading entrepreneurs in China. This will help them understand their customers’ needs and also how to survive stiff competition, among other challenges, that are faced by startups.