Since their launch in 2012, Shanghai-based incubator SuHeHui incubator has successfully incubated 150 companies and invested in a further 50. It selects about 10 startup teams as part of a competition batch and provides necessary services for startups during a 6-month-long incubation period along with a funding of 200,000RMB (in exchange for 8% share).
At the graduation ceremony and roadshow all teams are presenting ideas to attract further investments. TechNode interviewed Suhehui founder Darren Luo about how it operates and his opinions on China’s tech trends.
Tell us about Suhehui incubator and how can startups apply for it.
Suhe(苏河）is like mother river and hui（汇） means integration. Since the oldest entrepreneur was born in riverside, we wanted to give the meaning that the entrepreneurs are born here again and we gather them here. We aim to pass the spirit of the previous entrepreneurs to current entrepreneurs. It’s like a real startup college plus angel investment. It’s difficult to enter since out of up to 800 monthly applications registered we only choose 10 companies. With a lot of incubators in Shanghai, Suhehui offers free office space for startups to stay as long as they want. There are six offices around Shanghai, including Zhejang, Beijing, Cheongdu, Hangzhou, and Suzhou.
How much investment do you put into these startups?
In seed round we invest RMB 50,000 ~ 200,000 to take less than 8 % stake with valuation RMB 2.5 ~ 5 million. After the seed round, the fundraising process is very quick. In the angel round, we invest in startups with an offline angel investor group. This syndicate model helps reduce the risk by investing into early stage startups together. The investment amount ranges from RMB 1 to 3 million and valuation ranges from RMB 8 to 20 Million. With Suhehui taking the lead, together with our partners who are namely, government, schools, traditional incubators, angel investors, venture capitalists we make co-investment into these companies.
What’s the market trend in China and which of Suhehui’s startups reflect it?
The age of entrepreneurs is increasingly younger. O2O is surely the trend in the market. Consumer related business like clothes, eating, living, working and transportation.
51Qiguai.com is a grocery delivery service to the University campus. With 30,000 daily orders, there are 20 campuses in Shanghai using the service, and it also covers Hangzhou, Beijing and Guangzhou. Students can make online orders in advance, then the company sends groceries to school using its operation channel. The student can pick it up at several stations on campus. The company just received investment from Zihui Venture Capital with RMB$100 million valuation.
24Tidy.com is a laundry delivery service and the business model is same. The company sends a person to pick up the laundry and send it back after washing. The company raised US$20 million investment from Sequoia Capital.
Tell us about successful startup portfolios in Suhehui.
Wanzi.cc enables Chinese people traveling to other countries to find a Chinese speaking local guide. The founder previously worked for Alibaba, now leads the company with a 100 million RMB valuation. With 50 staff, each day the company generates more than 10 deals.
Mikecrm.com develops an online sheet-making tool, which helps enterprises with their customer management and marketing. The SaaS company now has 100,000 subscribers from enterprise and currently Suhehui’s online application form using the API is using Mikecrm. The company has received 4 million USD investment from Sequoia Capital.
DZZoffice.com is a business cloud storage and online Enterprise Resource Planning (ERP) tool. With 300,000 users, the service is like Dropbox and Google drive combined and integrate with Google. User can easily link to the email and calendar, upload file in the cloud to help the workflow.
What’s Suhehui’s own culture for startups?
On Wednesday, we have family night where we invite graduate and current batch startups to have dinner together. Graduate startups who moved out from Suhehui office come to our office as mentors and share their entrepreneur story. We already have done 200 family nights and most valuable thing is that founders can make lots of friends there and learn how to lead the business when they encounter different stages.
What’s your standard for investing in startups and what’s your message for entrepreneurs?
Investing in earlier startups is not about the product, business model nor the market size. It’s about the team and entrepreneur, who are willing to take the risk and do not give up their dreams and passion. To entrepreneurs; just do it and take it easy. There’s no secret of success, the only secret is the expectation of a brand new me.
Image Credit: Suhehui