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What We Can Learn from Entrepreneurs’ Cafes in China

Posted in: Musings

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By Yanli Zhang

During my recent visit to China, I had the opportunity to sit in the Garage Café, a well-known entrepreneurs’ café in Beijing, China. The café is located on the second floor of a building in the Zhongguancun district of Beijing — an entrepreneurial and IT hotspot widely considered as the Silicon Valley in China. On entering the café, I was immediately struck by the large crowd working here, the grass-roots environment, and the earnestness on the face of everybody working away at the computer. Order a cup of coffee or other drink here, most of them between 20 and 30 Chinese Yuan, which is equivalent to 3 to 5 dollars, and you can sit and work here for a whole day. The café features super high-speed broadband, much better than the erratic ones I had at the hotels. If you pay extra for a membership, you can have a fixed workspace without having to move. You can also rent meeting rooms with projectors at about 20 Yuan an hour. Near the door is a bulletin board with all kinds of ads looking for partners, team members, programmers, designers, or angel investors.

Sitting in the café, I could hear words such as angel investor, seed capital, series A, series B flying around, and people sharing their ideas and progress. I also saw a few eagle-eyed angel investors talking to people and scouting for projects, which I was told happens very frequently here. I talked to some people working in the café, who said even though this café is not as nicely decorated or upscale as some of the others on the same avenue, they actually felt more at ease working here in this more grass-roots environment, surrounded by energetic people. Some of them told me that working here made them feel they were not alone as entrepreneurs and helped them persist along the way. The café also routinely organizes entrepreneurship-themed events, and rents out space for other companies, such as Google or Baidu, to organize such events. For example, some events invite well-known entrepreneurs to share their success lessons, and some connect entrepreneurs to investors, and help select worthwhile projects to be funded.

Garage Café was established three years ago in 2011 by Su Di. The street on which it was located used to be a center of bookstores, which was deteriorating at the time. Garage Café pioneered the concept of offering an open work environment for entrepreneurs, a platform for entrepreneurs to work together and share ideas, and a bridge between entrepreneurs and investors. Since it was started, a few outstanding startups have walked out of its door, and became successful IT companies. Following its lead, a few similar cafés have opened on the same street, including 3W Café, Dark Horse Club, 36Kr, etc. Some of them have both a café and an incubator. Others combine offline and online entrepreneurship services, like 36Kr with In June, the Zhongguancun government formally named this street as the “Entrepreneurs’ Avenue” and made it a highlight of the entrepreneurship services offered in the district and provided certain incentives and support to such services.

Another such café that I visited is the 1898 Café near Peking University. The café is named 1898 Café after the year that Peking University was first established. 1898 Cafe is a crowd funding café, funded by the alumni in the Alumni Entrepreneurs Club of Peking University. Over 120 alumni are shareholders, with each contributing 30,000 Chinese Yuan. Each alum got in return an expense card of the same amount and the privilege to use café space to organize entrepreneurship-related events. I interviewed the founder, Yang Yong, about the origin, structure, and operation of 1898 Café. Two of the major reasons for opening the café, according to Yang Yong, are to solve the problem of funding and space for events of the Alumni Entrepreneurs Club. After opening, 1898 Café soon became a lively hub for alumni entrepreneurs to meet other entrepreneurs, share ideas, meet angel investors, and organize various kinds of entrepreneurship events. One of the biggest benefits of the crowd funding café concept, according to Yang Yong, is that it not only sources funds, but also sources talent and knowledge. One of the rules of 1898 Café is that each shareholder must organize at least one activity each year and be the waiter/waitress that day. This helped shareholders not only contribute money, but also brought together their ideas, intellect and friends, making the café a vibrant community for entrepreneurs.

From what I can see, services such as Garage Café and 1898 Café are a brilliant concept. It offers an entrepreneurial ecosystem that cafés like Starbucks cannot offer and allows everybody an opportunity to tap into that ecosystem. All of these cafes are open to everybody, although they are designed to be located in less visible streets to reduce non-entrepreneurship-related visitors. It further lowered the entry barrier of entrepreneur workspaces, because compared with incubators where entrepreneurs need to apply and get selected, here you can just walk into a café, order a cup of coffee, and work for the whole day in the company of like-minded entrepreneurs and hope to find partners and investors there.

From the experiences of places such as Silicon Valley, we know that knowledge flow and social networks are very important to fostering entrepreneurship. Perhaps we can learn a lesson or two from here in building an entrepreneurial ecosystem in our respective local communities. Cafés like these provide entrepreneur workspaces at a very low cost, and are thus accessible to people at the most grass-roots level. Everybody feels equal as they walk through the door, whether big shot or struggling nobody, all working hard toward his or her dreams.

Yanli Zhang is an associate professor in the Management department of the School of Business, and a member of the faculty of the Feliciano Center for Entrepreneurship.