There’s never been a better time to start an early-stage startup in China, according to one of the country’s most successful foreign entrepreneurs.
Fritz Demopoulous, co-founder of travel giant Qunar — which just raised $500 million — and now an investor with Queen’s Road Capital, told the audience at TechCrunch China that a “proliferation of capital on the angel side” is making it easier than ever to raise enough capital to get a startup off the ground.
Things are, however, more complicated for foreigners coming into China, Demopoulous — who is no longer in a role with Qunar — said. That’s because domestic entrepreneurs in the country tend to have a solid grasp of both the local market and — thanks to the internet and abundance of books and other media — a good understanding of U.S. and global trends.
“There’s more competition,” Demopoulous — who first arrived in China in the 1990s to work for Media Corp — explained. “In the past, you could turn up and be successful. But Chinese entrepreneurs get the local market and U.S. too. Unfortunately, most Americans only get what’s happening in North America.”
That said, there are opportunities emerging for non-Chinese nationals in China, but Demopoulous believes that entrepreneurs and their companies must fulfill some key — and often tricky criteria — to have any chance of success.
“There is room [for new companies], but you have to ask what value foreign companies can bring,” he explained, pointing out that money, tech and even management sophistication are already at advanced levels across China’s tech industry.
“Ideally, you have to be Chinese or have a strong Chinese reference point,” Demopoulous added. “And ask yourself everyday, ‘What value do I add?’”
Demopoulous, who led Qunar to an IPO, is primarily involved in venture capital these days. Queen’s Road Capital isn’t focused on China, however. Instead, it is using its experience and understanding of China to focus on Southeast Asia, a region that Demopoulous said he believes is too often overlooked in favor of China, India and the U.S..
Inspired by “multi-market successes” such as Skype and Spotify in Europe, he told TechCrunch interviewer Catherine Shu that he believes markets like Vietnam, Indonesia, Malaysia and others are ripe for companies that can execute across multiple countries.
“’If you can make it in New York, you can make it anywhere’ — so the song goes,” Demopoulous said. “There’s a thesis that if you succeed in China then you can succeed anywhere… but it’s probably too early to tell for sure.”
Demopoulous said he is particularly interested in marketplace startups and enterprise companies.