Hangzhou, the next Silicon Valley?

Going west along Hangzhou Wenyi West Road into Yuhang District, Alibaba’s new headquarters, “Taobao City”, is located here. More than 20,000 Alibaba employees are working in this new 450-acre park.

Opposite the park is another entrepreneurial park invested and built by the Hangzhou government, the "Haichuang Park". Judging from the name, this park seems to be more interested in "returned" entrepreneurial talents.

Two kilometers north of the "Haichuang Park" is the "Dream Town" used to incubate early-stage projects. This new base, which is ten times the size of "Taobao City", will attract more than 10,000 college student entrepreneurs in the next few years.

When ordinary people in Hangzhou talk about this new city collectively known as the "Future Science and Technology City", they always tell you that it is the "next Silicon Valley".

Alibaba Group and the Student Party

The number of entrepreneurs in Hangzhou is growing rapidly. The entrepreneurs who left Alibaba are of course the backbone of the group. After 15 years of establishment, Alibaba has more than 50,000 employees who have left the company worldwide.

Alibaba's former employees have organized the "Former Orange Club", which currently covers the same number of former employees as Alibaba's current employees. Among these 30,000 people, a considerable number of them have started their own businesses. "Among the former Orange Club entrepreneurs, more than 200 have received Series A funding," Shou Yuan, one of Taobao's founders and former Orange Club leader, told Tencent Technology.

These startups that originated from Alibaba are also easy to identify. Most of them still retain Alibaba’s “flower name” culture, using flower names to address each other within the company, and their flower names are usually printed in a prominent position on their business cards.

As another Internet listed company in Hangzhou, NetEase does not seem to have a significant role in promoting the entrepreneurial wave. Although the "NetEase system" formed by its Beijing content department has gained a good reputation in the venture capital circle, NetEase is rarely mentioned in the entrepreneurial circle in Hangzhou, where it is headquartered. In the eyes of some Alibaba entrepreneurs in Hangzhou, "NetEase has become a long-established game company, and NetEase people seem to lack the fighting spirit."

In addition to experienced Internet veterans, college students are another important entrepreneurial force in Hangzhou. According to data registered by the Hangzhou Municipal Administration for Industry and Commerce, there are as many as 8,876 companies started by college students in Hangzhou, with more than 19,000 entrepreneurial college students.

The "Dream Town" invested and built by the Hangzhou government in Yuhang District was put into use just last month. This entrepreneurial base is mainly used to incubate early entrepreneurial projects and offers preferential conditions such as three years of rent-free. The management committee plans to gather 10,000 college student entrepreneurs in the "town" within three years and cultivate 2,000 college student entrepreneurial projects. This level of government support for student entrepreneurship seems to be rarely heard of in other places.

There is both financial and policy support

Before and after Alibaba went public in 2014, the most talked-about topic was how many millionaires Alibaba had created. After this round of wealth creation, the most practical change Alibaba's listing brought to the local entrepreneurial environment was that there were more angel investors.

Especially for an entrepreneur who comes from Alibaba, it is almost no problem to get an angel investment. There are many angel investors in Hangzhou, but most of them are relatively low-key. Among them, those who are well-known to the outside world include Xie Shihuang and Wu Yongming, two of the 18 founders of Alibaba, Wu Bing, an investor of Vipshop, Li Zhiguo, the current CEO of Wacai.com, and Wang Gang, an angel investor of Didi.

In addition to angel investment, top VCs have also begun to turn their attention to Hangzhou. IDG Capital, Matrix Partners and other investment institutions have set up offices in Hangzhou.

The Hangzhou government is also very enthusiastic about entrepreneurship. Going west along Hangzhou Wenyi West Road into Yuhang District, Alibaba's new headquarters "Taobao City" is located here. More than 20,000 Alibaba employees work in this new park covering an area of ​​450 acres. The "Haichuang Park" (Zhejiang Overseas High-level Talent Innovation Park) opposite the park is another entrepreneurial park invested and built by the Hangzhou government. Going 2 kilometers north from the "Haichuang Park" is the "Dream Town" used to incubate early projects. When ordinary people in Hangzhou talk about this new city collectively known as the "Future Science and Technology City", they always tell you that it is the "next Silicon Valley."

For entrepreneurs, the more direct benefit is policy support. For example, for companies that set up a VIE structure, the Hangzhou Foreign Exchange Administration is more convenient than other places in terms of foreign exchange settlement and other procedures. "It may take one or two days to complete, while Beijing may take about one month," said an investor in Hangzhou.

Wedding.com is also an Internet company that chose the VIE structure. Its founder Yu Zhe told Tencent Technology, “SAFE basically gave us the green light all the way. We were very scared at the time and didn’t know what to do. Later we found that SAFE was very open-minded and would even help you revise the documents if they were not well written.”

Attractive but not sexy enough

Talent resources, financial advantages, and policy support have all become favorable conditions for Hangzhou to become the next startup paradise. Although Hangzhou is enough to be among the top three cities in China in terms of the number of startups, there are not many technology companies that have already formed an influence in terms of the size of the companies.

Apart from Alibaba, whose market value exceeds 200 billion US dollars, and some listed companies, there seems to be no new representatives of startups in Hangzhou, such as Xiaomi and DJI, with a scale of tens or even hundreds of billions. Didi, which has received the most attention in the past two years, chose Beijing from the first day of its establishment, even though its founder and angel investor were both from Alibaba.

Among the Hangzhou startups affiliated with Alibaba, e-commerce is still the most concentrated field, with typical representatives being Mogujie and Beibei.com. The second largest sector is Internet finance, such as Wacai.com, 51 Credit Card, and Tongbanjie.com.

"Hangzhou has many advantages after so many years of development, with many people and money. It is no exaggeration to say that Hangzhou's entrepreneurial environment ranks among the top three in the country. Of course, it is still some distance away from Beijing. But some industries such as e-commerce and Internet finance may be better than Beijing," investor Li Zhiguo told Tencent Technology.

E-commerce and finance are both in Alibaba's DNA. In addition, Zhejiang has a well-developed private economy and a relatively complete private financing system. It is not surprising that entrepreneurs in Hangzhou choose e-commerce and finance as their two major fields.

“People who come out of Alibaba are better at implementation and have a better understanding of business, so basically everything they do has a profit model, it’s just that they do it with more effort and at a slower pace,” an Alibaba entrepreneur summed up the characteristics of Alibaba people.

Being good at implementation and emphasizing profit models are the advantages of "Ali-affiliated" entrepreneurs, but from another perspective, it is also one of the reasons why Hangzhou startups are considered "lacking imagination" and "not sexy enough."

"The advantage of Zhejiang people is that they are shrewd and pragmatic, but the problem is that their vision is relatively limited. When starting a business, they focus more on making money rather than getting something done," said a Zhejiang-born Internet entrepreneur who chose to start a business in Beijing.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.