Beijing’s massive Z-innoway startup complex makes your local co-working space look pathetic

Rui Ma is 500 Startups‘ Venture Partner for greater China. She tweets at @RuiMa.

The accelerator boom (or, as some would say, bubble), is now sweeping through China in full force. From its humble beginnings as a neglected street of dilapidated bookshops, Haidian Book Street has been transformed into Beijing’s concentrated effort towards replicating that Silicon Valley “fan’er” (Chinese for “vibe”) domestically. In June 2014, Z-innoway (the Z stands for Zhongguancun, Beijing’s tech hub) opened its doors to a series of startup cafes, accelerators and other startup ecosystem players.

My colleague Li Shan and I sat down with the asset management company that operates this ambitious RMB 200 million (about US$300 million), 450,000 square feet project. Below we’ve summarized some of the accommodations aspiring entrepreneurs in Beijing now have access to as they begin their startup journey.

Z-innoway in a nutshell

• 339 startups (48 are foreign or offshore companies); 123 have raised funding


• 16 tenants have signed LOIs, nine have moved in


• Over 12 events weekly, majority open to public, some require membership


• 160,000 square feet of space already under operation

There are four main types of organizations that an early-stage startup might find themselves working with at Z-innoway: startup cafes, co-working spaces, accelerators, and membership-based entrepreneurship clubs.

Startup cafes are basically co-working spaces with hotdesks and longer-term rental opportunities. Anyone can walk in, order a cup of coffee, exploit the internet services for as long as one desires.

Co-working spaces are also scattered throughout Z-innoway, and we’ve included the prices and some description of the amenities below.

The accelerators in Z-innoway differ from those in US because an equity investment is not guaranteed, but decided at the end of the programs’ duration.

Finally, membership-based entrepreneurship clubs may have co-working spaces, along with mentorship and startup education programs that connect investors with startups. They are usually run by influential tech media outlets.

Binggo School

• Move-in date: April 2014


• Size: 630 square meters, two levels


• Features: startup cafe (first floor), co-working space (2nd floor), angel fund

Managed by a subsidiary of the asset management firm that oversees the entire street, Binggo has close ties with Virtue Innovalley, a Tsinghua University-affiliated co-working space and accelerator located below Kaifu Lee’s Innovation Works office.

 

3W Coffee

• Move-in Date: August 2013


• Size: 1500 square meters, three levels


• Features: startup cafe (first and second floor), Next Big Accelerator (third floor), User Experience Design Center, angel fund


• Number of equity investments: 12

3W is the longest-running accelerator on Z-innoway, but per the norm, acceptance into the program does not guarantee an equity investment. Among the last batch of about 15 companies, three received investment from 3W. A typical investment is RMB 500,000 (about US$80,000) and represents five to eight percent of the company. Its most well-known success so far is Lagou, a recruiting website for tech jobs that recently raised a $25MM Series B round and is rumored to be valued at $150MM.

3W was originally crowdfunded by a group of more than 100 influential entrepreneurs and angel investors including Neil Shen head of Sequoia China and Jason Zeng co-founder of Tencent, so it routinely pulls in high-profile speakers for its events. However, it remains to be seen how they will differentiate from other accelerators on the street, many of which are also backed by 3W’s backers.

Cheku Cafe

• Founded: April 2011


• Size: 800 square meters


• Features: startup cafe

The oldest tenant on the street and a regular media darling, Cheku Cafe is the original startup cafe. Its founder Su Di can call high-profile success stories like 36Kr and MomentCam Cheku Cafe alumni. Su is working on a new startup center not located within Z-innoway that will consist of an all-in-one building with lodging, coworking spaces, an accelerator, and events space. I am sure it will come with a sophisticated air filtering system so that geeks will never have to venture outside into the poisonous Beijing air if they don’t care to!

36kr

• Move-in date: March 2014


• Size: 1300 square meter


• Features: tech media outlet, accelerator

36Kr is the leading online tech media outlet in China. It began by translating articles from overseas sites such as TechCrunch. They eventually rebranded as an original content provider, and secured investment from numerous VC firms, many of whom get their companies covered there. Unlike in the US, strict journalism ethics disclosures (such as when a covered company shares the same investor as the media) are rarely followed, so one of the oft-touted advantages of joining 36kr’s accelerator, for better or for worse, is that one never has to worry about media publicity (Editor’s note: Tech in Asia writers certainly hope that startups have more to worry about than getting written about on a tech blog).

The Founder

• Move-in Date: June 2014


• Size: 900 square meters (two floors)


• Features: startup safe (first floor), Global Roadshow Center (second floor)

Founder Media, a high-end business magazine founded by the journalist Niu Wenwen, is expanding its Dark Horse platform to the US (we have hosted the delegates several times in Silicon Valley already) and the rest of China. Nine additional chapters will be up by year’s in various second-tier cities, and the team hopes to hold large-scale, synchronized teleconferences whereby mentors and investors can meet with teams remotely. Founder Media also has its own angel investment fund and has made over two dozen investments so in startups to date, mostly in its members.

Let a thousand accelerators bloom

Readers might be curious to know how 500 Startups, my employer, is reacting to this proliferation of “competition” worldwide, especially in China. As our head honcho Dave McClure will tell you, we heartily welcome each and every effort by other organizations to build up the startup ecosystem. Unbeknownst to many, we are small shareholders in a handful of accelerators worldwide, particularly in emerging economies. In those markets, we tend to make long-term bets in the geography but do not yet have the resources, local know-how, or a crystal clear thesis on how we can add value to the local ecosystem. We encourage other accelerator operators to adopt the same philosophy – focus on providing true value-add and a distinct strategy.

In a large market like China where tech entrepreneurship is still in hyper-growth mode, there will be many winners – let’s all work on widening the funnel (total startups with a chance) and increasing the yield (startups with a winning outcome) instead of focusing on one’s particular percentage take of the winnings. As the chips stack up, I look forward to learning from (and working with) the increasing number of players at the table. To paraphrase the words of Chairman Mao, may a thousand accelerators bloom!

Chia Li Shan, investment intern at 500 Startups, contributed significantly to this piece. She can be reached at li@500.co

Images courtesy of the author, editing by Terence Lee

Beijing’s massive Z-innoway startup complex makes your local co-working space look pathetic