In 2015, the success rate of China’s Internet companies was only around 5%. This stunning statistic has bewildered countless entrepreneurs. Many questions lingered in their minds, such as, “how can one increase the success rate of one’s company,” or “how does one achieve breakthroughs under the shadows of Internet giants like Tencent and Alibaba”?
Managing Partner and Founder of Source Code Capital, Mr. Cao, shared his opinions at today’s Demo China Autumn Summit in Hangzhou, China.
“Just as collecting all seven dragon balls enables the summoning of the great dragon, the more borders an enterprise crosses, the more victories and learnings it can gather, the greater the chance of success.”
As a super connector of “industrial capital,” Source Code Capital hopes to aid the collaboration between innovation, technology, and capital, to drive the evolution of traditional industries in the Information Revolution Age. By leveraging both financial and industrial capital, it strives to help entrepreneurs and businesses realize their potential.
Cao Yi expressed that Internet+, which has now become a part of our everyday vocabulary, started off as typical cross-border entrepreneurship. The “Big Three,” which are Sina, NetEase, and Sohu, all began by importing the models of newspapers and magazines onto the Internet, achieving the elementary crossover between the Internet and news outlets. However, such a crossover entails knowledge of both the media and the Internet. Thus, many in the media industry failed to grasp the opportunity of establishing an enterprise that combines the Internet and media.
In the waves of the current Information Revolution, cross-border entrepreneurship continues to undergo change and expansion. Internet+ is in the process of permeating a growing number of industries. Due to factors such as retail and traditional distribution channels, the industrial Internet poses higher standards of entrepreneurship and more difficulties to border-crossing, in comparison to Internet Plus media. At the same time, it has relatively less competition and a higher success rate. As entrepreneurship advances into the Age of Artificial Intelligence (AI), entrepreneurs must not only understand the industry, but also effectively employ AI technologies, essential facilities, and AI concepts. As standards of entrepreneurship rise, opportunities for innovation naturally increase in number.
As for the pressure to survive in the midst of the Internet giants, Mr. Cao contended that one does not need to worry excessively about this. Although industrial capital, represented by the likes of Tencent and Alibaba, have become increasingly influential over the past five years, business models in every industry go through phases of transition. Wang Xing, Founder of Meituan, once said that, “the match has now entered into the second half.” While many large enterprises have occupied the lion’s share of the market thus far, the existence of four variables still allows for more potential to be discovered in the business of entrepreneurship:
- Talented individuals and their mobility
- Capital mobility
- Policies and regulation
- The basic facilities of technology will experience subversive changes
Firstly, in the system of large companies, superior talents will naturally emerge above the rest.
Secondly, although the BAT is wealthy, there exists many other types of capital. Capital will remain in favor of promising innovative projects.
Additionally, every conscientious corporation upholds its boundaries as business models change. For example, it can be said that Tencent is currently working in two and a half areas: IM and digital content distribution, with the remaining half being media and the rest being ecological investment. Whether it is transportation (DiDi); food delivery (Meituan); or e-Commerce (JD), Tencent has used 15-25% in strategic investment in order to break into foreign territories. Entrepreneurs should not reject strategic investors. If appropriately executed, strategic investors can help facilitate growth.
To illustrate this, Cao Yi used the example of Yijiupi, a B2B FMCG enterprise Source Code Capital invested in. Yijiupi has been providing 15 million restaurants and convenience stores across China with fast-moving consumer goods, with the staple merchandise being beverages. Source Code helped Yijiupi attract Meituan as its strategic investor. Since their business collaboration was direct, the 4 million businesses on Meituan were able to act as Yijiupi’s most direct and efficient clients. Yijiupi’s promising prospects, which is the result of its collaboration with industrial capital, helped it to quickly obtain its Series C funding.
Mr. Cao stressed that Source Code Capital would act as the “super connector” of industrial capital in order to aid the cooperation between innovative companies, industries and financial capital, and to bring more entrepreneurial projects to success.
