Investors more interested in management teams, strategy
Chinese Internet companies are seeking to connect with traditional industries, corporate representatives in the online sector said Thursday, noting that financing remains the key issue for Internet start-ups. [Special coverage]
The country's "Internet Plus" initiative integrates the mobile Internet, cloud computing, big data and the Internet of Things with modern manufacturing. Under that initiative, companies expect to connect more online platforms with traditional industries such as education, lifestyle services and transportation, Cheng Wei, CEO of car-hailing services company Didi Kuaidi, said at the ongoing Annual Meeting of the New Champions 2015, also known as Summer Davos, in Dalian, Northeast China's Liaoning Province.
The number of Internet users in the country reached 650 million in 2014, up 5 percent year-on-year, Beijing-based market research firm iResearch said in a report in August.
Total revenue of the Internet economy stood at 870.6 billion yuan ($136.3 billion) in 2014, up about 47 percent year-on-year. It also estimated the total revenue of the sector would exceed 2 trillion yuan by 2018.
"Internet start-ups were seen as 'having their heads in the clouds,' but now we're getting down to earth," Cheng said, noting that many Internet companies have been mulling connections with the upper and lower parts of supply chains.
Zhang Tao, CEO of Shanghai-based retail and restaurant review site dianping.com, agreed. "We've been putting an emphasis on the customer side for the past decade, and we're going to invest more in the business side in the next few years," Zhang said.
He noted that these efforts include teaming up with department stores and shopping centers like Parkson Retail Group and Dalian Wanda Group to help diversify the company's online lifestyle services.
While online-to-offline services are considered as a booming industry in the country, Internet companies have to figure out how to get funding and use the money they raise, Cheng noted.
Didi Kuaidi announced Wednesday it had finished a fundraising round of $3 billion. "We're quite cautious about how to use the money," Cheng said during a forum Thursday.
He noted that Didi Kuaidi is likely to hire more young people to maintain a more innovative and open culture. More experienced employees, however, are in charge of work such as financing and government relations.
Media reports recently said that some small and medium-sized Internet start-ups had sought to exaggerate or falsify their fundraising efforts. Ron Cao, co-founder and managing director of venture equity firm Lightspeed China Partners, noted that it is inevitable that there will be some falsified numbers in the fundraising process.
"Investors will look more and more at companies' management teams and business models to avoid risks," Cao told the Global Times Thursday.
Fabian Thehos, an investment manager at UK-based biomedical research charity Wellcome Trust, told the Global Times Thursday that the fundraising dilemma is a common issue for Internet start-ups all over the world.
"A lot of investors are looking for particularly high-growth opportunities, which are not easy to find, generally speaking," said Thehos.
Read more in Special Coverage:
