Venture capital funds may be drying up, but good business ideas keep flowing from the minds of students and young entrepreneurs around the country.
"Despite the downturn in venture capital, young business people and students can still take advantage of their creativity and what they learn on campus to create solid business opportunities," said Jiang Yanfu, director of Tsinghua University's Entrepreneurship Research Centre. Jiang said many start-ups have readjusted their business plans and become more reasonable in their expectations due to the changing investment environment in the information technology (IT) industry.
In last month's fourth Tsinghua Student Business Plan Competition, an event which has resulted in a dozen millionaires, most student business teams concentrated on traditional technologies.
Unlike previous years when even a sophomore could become a chief executive of a fledgling start-up, most students entering the contest this year were doctorate or business school students with practical working experience. Analysts said that events at Tsinghua reflect the changing nature of student entrepreneurship across the country. With the technology downturn, business plan competitions at colleges across China are reducing in scale.
Zhang Zaixing, vice-president of Tsinghua, said university support for student businesses was also becoming more standardized. Tsinghua has increased the level of financial and management education to help students start businesses.
The drying up of venture capital is the result of the failure of such high-profile student companies as Fanso.com, a website launched by Tsinghua students. The student company won the first China National Student Business Plan Competition in 2000 and landed US$1 million in venture capital. But the high-profile company went bankrupt last month.
An investment official with the Beijing-based Innovative Investment Fund said his company was cautious about investing in any student projects because of such failures.
"If we invest, we would demand a high-level of control because students are quite immature in managing a business," he told Business Weekly.
Previously, many investors were not concerned about their status as minor shareholders in student enterprises.
But the increasing caution of investors has not stopped students and young entrepreneurs from setting up enterprises. The winner of the latest Tsinghua business plan competition was the Bright Point team, which designed an optical fiber lighting system. Team member Zhu Pengxiang, a master's candidate at Tsinghua, said his team's business was likely to become a profitable venture as it filled a market vacuum," said Zhu.
Jiang of the entrepreneurship research centre said many student start-up businesses showed great innovation and creativity. These qualities needed to be highlighted because of the current technology downturn, he said.
"The depressed market offers a chance for young entrepreneurs to work out more complete and adaptive business plans," Jiang said.
Bright Point has been negotiating with the Palace Museum to light its exhibitions with its patented technology, which can reduce electricity bills by 60 per cent as well as increasing lighting safety. The cost of installing the technology can be recouped within two years through cost savings.
"The project in the Forbidden City would help us win market recognition," said Zhu.
Despite their promising future, team members claim they would be happy to have their start-ups absorbed by a larger company. Such an outcome would provide a more reliable capital source to develop and expand their invention. Jiang said many young start-ups were reluctant to make such compromises since investment was easier to obtain in the past.
"Now students and young entrepreneurs realize they have to be more reasonable," Jiang said.
（China Daily）
