Entrepreneurship in China in on Fire

By: Justin Taubman 

After meeting with many successful entrepreneurs at some of China’s top start-up incubators and accelerators in Shanghai, it is clear that China is getting serious about entrepreneurship. Until recently, Chinese families have not been very supportive of their children leaving secure jobs to pursue entrepreneurial ventures. The most educated and wealthy families have always pushed their children towards traditional businesses, but that is starting to change. The Chinese government has realized the importance of innovation and the creation of new businesses and technology. While traditional careers in industries like finance, engineering, or medicine are still pursued by many, the government support of these initiatives has made entrepreneurial pursuits more accepted.

Our first peek into the young entrepreneurship scene in China with the AdVENTURE Challenge: China program was at the Shanghai Jiao Tong University (SJTU) Science Park. I was thoroughly impressed by the five MBA student companies that presented their businesses to our group. The government funded SJTU Science Park sponsored promising student led companies by providing them with mentorship, office space, very favorable seed and even venture financing.

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Demonstration by marketing company, LikeShow at SJTU Science Park

 

Chinaccelerator Office in Shanghai

Chinaccelerator Office in Shanghai

Our next visit was to Chinaccelerator, a Shanghai based accelerator modeled after the US TechStars and 500 Startups. Chinacellerator’s Managing Director, William Bean, greeted us and walked us around their office that looked just like any startup you might see in downtown San Francisco. We walked past several young CEOs getting head massages to get a glass enclosed conference room where we learned more about the startup scene in China. He used a buzzword we were hearing quite often, C2C that meant, “Copy to China”. When we think about entrepreneurship in the US, we think about disruption, however Will Bean explained that there was just too much low hanging fruit by copying Western businesses and bringing them to China.

I learned from these visits and conversations that China is on every Western company’s radar, but it is very difficult to implement the same product or service here. For example, Uber has been in China for about a year now and they are paying their drivers double the fares in order to keep them on the road. This may work for a company like Uber with deep pockets, but it is not sustainable. There are very distinct cultural differences in China that requires extensive customer discovery prior to successful implementation.

Taubman-J-19Aug14-1Justin Taubman is a first year MBA candidate at the Robert H. Smith School of Business. After receiving his undergraduate degree in International Relations from Trinity College in Connecticut, Justin worked at the US Department of Homeland Security for seven years. He was focused on innovative security and customer service solutions for aviation security. Justin resigned as Program Manager of Passenger Innovation to return to school, where he is focused on Entrepreneurial Finance. Justin serves as the President of the Entrepreneurship Club and will be helping out at an e-commerce start-up this summer, called FoodBAM in Boston, Massachusetts. 

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Adventure Challenge: China – In Country Prep and Customer Discovery

By Philip Webster

Conducting customer discovery for a product aimed at the Chinese market while you’re actually in China is an eye opening experience. After weeks of refining our business plan in the U.S., the chance to talk directly to potential customers has been invaluable. Yesterday Justin and I were fortunate enough to pitch an abbreviated version of our business plan to a delegation of business and educational leaders in the city of Bengbu. Afterwards we received a lot of feedback from students who attended the presentation.

Me and Vivian negotiating her intern salary

Me and Vivian negotiating her intern salary

One student, Vivian, came right up to me afterwards and told me exactly why our business wouldn’t work in China. When I defended our plan she continued to elaborate on exactly why it wouldn’t work and she convinced me that we did indeed have a few holes in our pricing scheme and our bring to market strategy. Luckily, Vivian is a marketing major and had a ton of great ideas on how to fix the product and market to young people in China. I’m hoping she’ll be the first unpaid intern for our company! (Vivian was also instrumental in encouraging our table at dinner to drink a concoction that I referred to as Dragon’s Blood, that began a series of hilarious and bizarre events that Justin blogged about yesterday.)

A huge lesson we’ve learned from pitching this idea in Bengbu and doing a brief ‘elevator pitch’ for so many strangers is how important it is to clarify the actual problem you are solving. I think the version of the pitch that we’ll present at the competition on Friday will be very clear in that regard, but I’ve definitely had the experience of explaining the business to people and they respond with a resounding “So what?”. If you don’t make it clear what the customer pain points are and how you’re product or service addresses them, then you just have a cool idea and not a business.

In the middle of writing this entry we arrived at our hotel in Beijing, the Beijing Marriott, and it is pretty spectacular. The Smith School is traveling in style in China.

Back to customer discovery.

Visiting the Forbidden City

Visiting the Forbidden City

We’ve had some really good conversations with other people we’ve met in Shanghai and Bengbu about how they learned English. (Our pitch is for a company that helps Chinese students improve their English language skills.) They’ve definitely given us some great insights on how English is studied here and the methods people use to improve outside of school. We’re incorporating a lot of these insights into the pitch and hope to squeeze in a few more interviews here in Beijing before the competition on Friday. I will say the language barrier has made customer discovery a bit more challenging. There are nuances and subtleties that are sometimes difficult to ascertain.

Earlier today we toured Tiananmen Square and the Forbidden City. It’s easily the coolest thing I’ve seen in China this week. I definitely have to come back here as a tourist soon so I can spend the whole day exploring.

Okay, blog time is done for tonight…I’ve got a pitch to work on!

 

Webster-P-19Aug14-3Phillip Webster is a 1st year MBA student at the Smith School focusing on entrepreneurship. Originally trained as an actor and musician, he received a BFA from Northern Kentucky University and an MA from Aberystwyth University (Wales). After working onstage and behind the scenes in the arts for many years, Phillip enlisted in the U.S. Air Force to become an Arabic translator. He graduated from the Arabic program at the prestigious Defense Language Institute and served four years before returning to civilian life. Phillip is currently pursuing entrepreneurial ventures in the arts, language and education sectors. 

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Greetings From the City of Bengbu

By: Justin Gordon 

We JUST departed Bengbu, China, and it is my pleasure to blog about this portion of our trip. We departed Shanghai early from the brand new Hongqiao High Speed Rail Station bound for the central coast of China. The High Speed Rail was an experience in itself. Honqiao Station reminded me more of an airport than a train station. That is no coincidence; it is collocated in Hongqiao Airport, Shanghai’s domestic airport. This combination made for an impressive inter-modal transportation hub the likes of which are rarely seen in the U.S. The train journey itself is essentially identical to a trip on the Japanese “Bullet Train”, except in China the trains are known as “Harmony”. At an impressive speed of 300 km/h (roughly 190 mph) we whisked towards Bengbu.

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It was a bit hazy with light drizzle as we arrived. We immediately traveled by bus to Anhui University of Finance & Economics. We were treated to yet another wonderful authentic Chinese buffet.  During the meal we had the opportunity to dine with a number of undergraduate students studying various business disciplines. Using their impressive English skills they provided us insight into what it’s like to study at a Chinese university. They also discussed what they hope to do in the business world upon graduation. I think the sense in the U.S. is that China is lagging the West in gender equality in the workplace. I thought it was interesting that the female students said they anticipate having just as many opportunities in the job market after graduation as their male peers. Continue reading

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Kicking Off the AdVENTURE Challenge: China – First Impressions

By Philip Webster

After a brief fifteen-hour flight, Tiffany and I arrived in Shanghai on Thursday afternoon. Upon arrival I was seriously questioning my decision to pull an all-nighter the night before we left Maryland. I was trying to reset my body clock on Day One of this trip and planned to be so tired on the plane that I would sleep the whole time on the plane and arrive in China completely ready for action. I don’t usually sleep well airplanes even when I’m exhausted, so I brought a sleeping pill to make sure I could get some quality zzz’s just in case. Unfortunately my desire to watch the in-flight movie, Night at the Museum 3 (don’t judge) counteracted some of the soporific effects of the Ambien and I only slept for about four hours. So, the first thing I did after arriving in this amazing country for the first time was take a nap.

IMG_0046 Continue reading

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Preparing for the 2015 AdVENTURE Challenge: CHINA

By Tiffany Chang

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Greetings from the air as I am currently writing from my flight to Shanghai! While I am headed to China a few days earlier than the rest of the AdVENTURE Challenge: China group to do some exploring, once the Smith MBA team lands, that’s when the real fun (and work!) begins.

Our journey starts in Shanghai where we will stay for three days experiencing tours, Chinese acrobatics, and visiting accelerators; then we take a train down to Bengbu to visit an incubator and Enelco Environmental Technology. Finally we culminate the rest of our trip with a China Business Model Competition in Beijing.

This trip sounds like a TON of fun but it’s also very much about good, hard work. Each one of us has prepared up until this point to work on a variety of new innovative ideas and business models that will be pitched in a business model competition with participating universities in China. With all the amazing pit stops to incubators, accelerators and historic landmarks that the Dingman Center has arranged for us, there’s only one major thing left to do to prepare for the trip! Continue reading

Terp Toolkit: Legal and Intellectual Property Tips for Entrepreneurs

There is no entrepreneur in the world who won’t need legal guidance at some point in their entrepreneurial journey.

For simple legal matters such as incorporation or basic start-up paperwork, services such as LegalZoom, LawDepot or RocketLawyer are a good place to start.

9400252-contract-for-business-law-on-terms-of-agreementHowever, for more complicated matters like establishing a Privacy Policy, Terms of Use Agreement, or other documents tailored to your business, it may be worth consulting an attorney. If you are running short of funds, you can utilize RocketLawyer’s “Ask a Lawyer” feature.  You can get the answers to simple questions for free and find lawyers near you that charge reasonable prices for their services. Continue reading

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Event Recap: 2015 Smith Entrepreneurship Research Conference

Each year, the Smith School of Business hosts leading and up-and-coming stars in entrepreneurship research from around the globe for a three-day academic research conference. This year celebrated the 11th anniversary of the Smith Entrepreneurship Research Conference, which was held from May 7-9, in Van Munching Hall at the Robert H. Smith School of Business. The invitation only conference is co-chaired by Anil Gupta, the Michael D. Dingman Chair in Strategy and Entrepreneurship at the Smith School, and David Kirsch, Ph.D., Associate Professor of Management and Entrepreneurship at the Smith School.

The goal of the invitation-only event is to gather both junior and non-tenured faculty to present early stage entrepreneurship research to senior, tenured faculty for discussion and feedback — very similar to the way in which entrepreneurs constantly pitch their ideas, hear reactions and pivot. Continue reading

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Terp Toolkit: Financing Your Startup

Financing is a hurdle faced by nearly every entrepreneur and can the need for funding can occur at various stages of a company’s life cycle. It’s important to know what options are available, as well as the risks that come with each.

indexSome common methods of financing include:

  •  Friends & Family – Many early stage companies raise a “friends & family” round, relying on the networks of the startup’s founders for seed capital.
  • Crowdfunding – If you are selling a product or service that you think would appeal directly to consumers and you need capital to fund your business, consider crowdfunding as an option. Sites like Kickstarter, Indiegogo , and  Gofundme allow you to post your “project” for viewing by thousands of potential funders in exchange for a percentage share of your money raised.images
  • Contests & Grants – A great way to get funds for your start-up without giving up equity is to apply to contests and grants. In this article Forbes offers some tips for those seeking grants.  A tip: follow entrepreneurship organizations and centers, accelerators, and VC firms / angel groups on social media for posts about local contests.
  • Small Business Loans – This option is most effective if you have been in business for a while and are generating some cash flow.  For those who meet these requirements, the Small Business Administration offers different types of loans to help you grow your business. angel2
  • Angel Investors – For early stage companies with an ability to scale quickly and high growth potential, there is the option of raising a round from angel investors. There are many angel investors, both individuals and groups, who invest ~$25B each year in early stage companies. Most angel deals are done with companies who have either successful beta testing or initial revenues. Deals range from straight equity to convertible notes.
  • Venture Capital Firms – For later stage start-ups with a proven track record of success who are seeking to reach the next level, raising venture capital funds can be the right next step. The total Venture Capital market is ~$45B, invested in a variety of industries and stages.  You can check out the VC100 for a look at the top 100 venture capital firms in the U.S. Researching the right firms for your company stage and industry is essential when raising VC funds.  Looking at the funding history for similar companies to yours on CrunchBase or AngelList  can be a good place to start your research.

Continue reading

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Smith Centers of Excellence and SERC to Present JOBS Act Panel: “How To Protect The Crowd In Crowdfunding”

It has been three years since Obama’s historic signing of the JOBS Act, which was enacted as a way to help small businesses, the lifeblood of job growth in the U.S., more easily obtain funding by easing securities regulations. Since 2012, the entrepreneurial community has eagerly awaited the SEC’s final guidance on the rules regarding crowdfunding.

It appears that the SEC is close to issuing rules on how the Act will affect equity investments of non-accredited investors in small businesses and startups, particularly through crowdfunding vehicles.

jobs-act-senate-passesOn Friday, May 8, the Smith School’s Center for Financial Policy, Dingman Center for Entrepreneurship and the Smith Entrepreneurship Research Conference will host a panel discussion among experts from the academic, regulatory and entrepreneurial communities on how to regulate the industry in a way that protects investors from fraudulent activity while preserving the spirit of the JOBS Act.

The panel will be moderated by Brent Goldfarb, Academic Director at the Dingman Center and Associate Professor.

The panelists will include:

  • Wayne Kimmel, Founder and Managing Partner, Seventy-Six Capital
  • David Lynn, Partner, Morrison & Forester, and former Chief Counsel of the Division of Corporation Finance at the U.S. Securities and Exchange Commission
  • Ramana Nanda, Associate Professor of Business Administration, Harvard University
  • Brian Knight, Associate Director, Financial Policy, Center for Financial Markets, Milken Institute

The panel culminates the annual invitation-only Smith Entrepreneurship Research Conference hosted by the University of Maryland, which is attended by faculty from leading academic institutions (e.g., Wharton, Stanford and MIT). Leading researchers and rising stars in entrepreneurship research gather to discuss relevant social, economic and organizational issues around entrepreneurship.

The crowdfunding panel is the only session open to the public. Join us for the event, which will be held in Tyser Auditorium, Van Munching Hall at 3:30 on Friday, May 8. For more event details, please click here.

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Terp Toolkit: Accounting for Your Startup

When launching a business, often there are a variety of start-up costs to track. Being organized on the front-end with your startup’s finances will pay off in the long-run.

accounting_webThere are several tools at a variety of price points that will help you keep your financial records. Here are some startup-friendly resources: Continue reading

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