The main reason for the current tech winter in China was the flush of money that has hit the industry, especially by the government, says VC veteran William Bao Bean to the BBC. A re-structuring of China’s start-ups’ scene is long overdue and that is good news for investors, he argues.
“What drove things completely insane was too much money,” argues William Bao Bean, managing director of Chinaccelerator, a Shanghai-based start-up accelerator.
There was a “real push for economic growth from the government” and big funding from state coffers, he says.
This has levelled off.
“Before, you could get $3m with two people knocking and a smile. Now you can get $3m with two people knocking and a smile and six weeks of meetings,” he says.
Dockless bike sharing rivals Mobike and Ofo were pedalling off with investors’ money last year in a bitter duel for market share.
That sector’s now hit the brakes…
But there are advantages to China’s tech bubble deflating.
For investors, things are “actually much better in a downturn than a hot period, so good companies have a chance to shine,” says Mr Bean.
When everybody can get money, “it makes it difficult for the best to stand out”, he says.
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