China’s start-up entrepreneurs need to lose the spend, spend, spend mentality as funding gets tight, say experts
Investors are becoming more cautious over who they fund, leading to a squeeze on liquidity
China’s burgeoning start-ups should stop spending cash freely to build up their firms and develop a more frugal and sustainable business model as funding and loans become increasingly tight for new ventures, according to experts.
“There are many start-ups flocking in everyday, but there are also dozens of start-ups closing down each day for one reason – they are unable to secure a new round of funding,” said Xu Dandan, the founder and chairman of 3W Entrepreneurship Service Platform, which operates the mainland’s first crowdfunded start-up cafe 3W Coffee in Beijing’s Zhongguancun district.
It meant some businesses were failing as liquidity was so tight, but other start-ups which managed to raise a lot of cash over the past one or two years should be well placed, Xu said.
“Some start-ups should take the chance to accelerate by taking over the talent and market share of their competitors, but it’s important that they develop new markets and new products while expanding,” Xu said.
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