Unicorn fever seizes China as start-ups and investors seek the next big thing
It takes an average of four years for a start-up in China to reach unicorn status – or US$1 billion in valuation – but competition is severe for the hundreds of companies, founders and financiers who are seeking the next big thing
It is approaching lunchtime on a crisp and clear Thursday in December and the first of the start-up founders have arrived at the glass-roofed teahouse in Beijing’s Rock Sparrow hutong. Inside the toasty members-only club, a long narrow table has been set up, blinds are drawn and about seven or eight small-business owners will try to interest investors looking for the Next Big Thing.
Welcome to start-up pitching, China-style.
Things, however, are noticeably slower this afternoon, according to Zheng Linghui, owner of the teahouse and organiser of the weekly meetings by Jianyihui, a community for private equity and angel investors. It is two weeks to the year-end and many investors have closed their books and in holiday mode.
Of the seven companies that took part in the meeting, one pitched a high-quality tampon with a “silky feel”, another presented its roller-skating lessons, and yet another was engaged in wilderness survival training for companies looking to build team camaraderie among their employees. This session’s theme was consumption. Other weeks, it could be technology or some other sector.
Questions from the investors, mainly from smaller venture capital firms, centred on operating numbers and how the start-ups differentiate themselves from what is in the market. Each session takes around 30 minutes and the event ended at about 5pm.
The weekly session is one of hundreds of similar meetings that take place each day in China as start-ups seek funding and investors try to predict the next unicorn, or privately held company with a valuation north of US$1 billion.