China’s tech entrepreneurs are getting younger

While the high-tech industry is maturing in China, its entrepreneurs are paradoxically getting younger.

“Two years ago, only 30-40% of founders in our portfolio were under 30. Now almost all of them are below 30 and most are between 24 and 26,” said Shanghai-based GGV Capital managing director Jenny Lee. Her company has overseen $2.6 billion in funds and has invested in more than a hundred companies.

When the first generation of Chinese Internet entrepreneurs founded their companies in the late 1990s and early 2000s, many of them were in their late 20s and early 30s. Former English teacher Jack Ma founded Alibaba at 34, Pony Ma founded IT conglomerate Tencent at 27, and Robin Li founded search giant Baidu at 31. These tech tycoons now represent three of China’s four richest men according to the Bloomberg Billionaires List as of December 16, 2015.

(Left: Jack Ma, 51, $30.3B; Center: Pony Ma, 44, $19.2B; Right: Li, 47, $14.4B.
Photo credit: LinkedIn Pulse)

Today, a constellation of Chinese millennials are launching their companies shortly after their university graduation. The percentage of the 7.49 million new college graduates kickstarting their own businesses doubled from 3.2% in 2014 to 6.4% in 2015, according to the survey by the Chinese HR company Zhaopin. When EY asked almost 3,000 youths aged 18-25 in 13 nations if they wanted to be their own boss, a whopping 89% of Chinese youths said yes in 2015, the second highest rate in the world after Mexico.

At Beijing’s technology hub Zhongguancun often billed the “Silicon Valley of China” as it houses the headquarters of Lenovo and Baidu, Beijing native and Cambridge University graduate Xiao Dun co-founded 17zuoye when he was 26 years old. His interactive educational platform for students, teachers, and parents raised $100 million earlier this year, which valued the company at $600 million.

               (Mr Xiao speaks during the 2015 Rise conference in Hong Kong.)

“I’m one of the old entrepreneurs in Zhongguancun now. Most entrepreneurs in high tech these days are born after 1990,” said Mr Xiao. “Those Millennials are very good at promoting themselves and leveraging social media.”

Mr Xiao added that the startup scene has become much more vibrant than when he started in 2011 with burgeoning pool of talent and investment.

Between 2013 and 2014, the total VC deal volume in China almost doubled from 738 to 1,334, according to a 2015 PwC report. Ms. Lee of GGV capital stated that the number of registered VC firms in China snowballed from about 100 in 2000 when she started at GGV to more than 8,000 by 2015.

University resources for entrepreneurship have also mushroomed. Tsinghua University rolled out x-lab to foster innovation on campus in 2013. Its archrival Peking University’s Guanghua School of Management began including “self-employed” as a category for the first time in its 2014 career report. Four of its 174 graduates became “self-employed” last year.

In addition to China’s most revered universities, Chinese government is also betting on startups. To encourage entrepreneurship among college graduates, Beijing announced plans this year to establish 40 billion yuan ($6.5 billion) venture fund and reduce tax and red tape on start-ups. In June, China’s State Council issued a statement that proposed “mass entrepreneurship and innovation” since “forces that have traditionally driven economic growth are weakening.”

For the 22-year-old Nelson Zhang, he could not wait until graduation to embark on an entrepreneurial path. After spending his formative years in Shanghai where he liked to “make stuff at hackerspace,” Mr Zhang matriculated at UC Berkeley. (Mr Zhang, profiled below with his LinkedIn photo, was on the 2014 Forbes China 30 Under 30 list).

During his sophomore year, however, Mr Zhang dropped out with his 3D printing company to join the 2013 class of Thiel Fellowship, which grants students under 23 $100,000 each to “focus on their work, their research, and their self-education while outside of university.” Mr Zhang’s company Wearhaus has since pivoted to manufacturing wireless social headphones, and sold its first batch of 3,000 headphones priced at $199 this summer.

Mr Zhang currently rotates between a month at his company headquarters in the Bay area and a month at his factory in Shenzhen. He and Mr Xiao are examples of “haigui,” a Chinese homophone meaning “sea turtle” which refers to those who have studied overseas before returning to China.

While the founders of BAT (Baidu, Alibaba, and Tencent) all finished undergrad studies in China and only Mr. Li of Baidu went abroad to the US for graduate school, many of the rising generation of entrepreneurs have benefited from the mass exodus of Chinese students to elite institutions in the US and the UK beginning in the 2000s.

Although Mr Zhang’s parents have always been supportive of his ventures, giving up a prestigious American diploma still took some persuading.

“I began persuading them by saying: ‘how would you like me to save thousands of dollars every month?’,” Mr Zhang said. “I eventually learned a lot more working on my startup than I would have in school.”

#StudentVoices
*Edited by LinkedIn Education & Millennials Editor Maya Pope-Chappell