AT first glance the Garage Café in Beijing’s Haidian District, a melting pot of universities and IT companies, looks no different from any other coffee shop. Inside there’s soft lighting and a menu that offers a good selection of drinks.
But take a look around and you’ll notice an overflowing message board on one wall. Look closer, and you’ll see that the messages are actually advertisements, the majority of which are for business partners and investors.
The Garage Café is a gathering place for start-up companies that cannot afford to rent offi ce space. Young entrepreneurs and their staff come here in the morning, mark out a desk or two, and spend the whole day in the café having bought a cup of coffee. Wireless Internet is free.
The café also draws in venture investors who come looking for projects with commercial potential. Deals are made here.
In China’s big cities, business-themed cafés like the Garage Café have taken off as a growing number of ambitious young Chinese open businesses. By offering close-to-free working space for entrepreneurs on small budgets, these cafés are providing a great business service, in addition to tasty coffee.
Cozy, Cheap and Easy
Feng Tao is the founder of a new social networking website, which currently employs three people. He and his staff have been frequenting the café for a year and use it as a base camp of sorts for daily business errands.
“Here you’ve got tables, seats, free internet and office equipment – all for the price of a cup of coffee. Expenditures here for a whole month add up to less than RMB 2,000 for four people. That’s way below the outlay needed to rent an offi ce,” Feng said.
But Feng says that the low cost isn’t the most attractive thing about the café. More appealing is the chance to meet kindred spirits with whom he can discuss business plans and find way to access venture capital.
This meeting of ideas and capital is what Su Di, founder of Garage Café, had in mind when he dreamt up the idea. “We have aimed from the beginning to pro-vide a completely open low-cost platform for start-ups that is accessible to all businesspeople and investors,” says Su. He envisions his café as an incubator of new small private companies that facilitates exchanges between young teams on topics such as development plans and product design. In such a communal environment, Su argues, nascent businesses can grow faster than in isolation.
On China Today’s visit, ‘Coco’ Zhang, an IT company rep, was scouting the café for talent. She’s an in-house headhunter, and says that her company could use some new blood. Coco heard that there’s usually a slew of talented technicians cooped up in the café, so she began to make regular visits. “The hiring costs are lower than through an agent, but the odds of hauling in the right person are also slimmer,” she admits. She’s noticed that most of those working at the café are more interested in working on their own projects than under an employer.
Sharing and Inspiring
“To be specific, we are an Internet-themed café, instead of one for new businesses in general,” remarked Bao Chunhua, founder of 3W, located a stone’s throw away from the Garage Café.“More than a congregation site in the physical sense, we are committed to communications among professionals in the IT sector.”
Anyone with an entrepreneurial spirit can step into the Garage Café and work on or talk about their undertakings, regardless of how far along the start-up process his or her business is. 3W is different.
“If all you can present is an idea, we could advise you to return to us after you’ve come up with a complete business plan and have a team with whom to work,” Bao says. He explains that a nebulous idea is not enough to convince potential investors – they won’t write checks until they see a workable plan for a marketable product. “Our activities and services are tailor-made for established IT entrepreneurs to improve their expertise and upgrade their management, rather than catering to the initial needs of new-born companies.”
One draw card of 3W is its “salons,”or informal conventions. The creation of the café actually derived from a group of successful IT entrepreneurs’ desire for a regular gathering place. At its first salon more than 100 leaders of China’s top IT companies turned up, among them Tencent co-founder Li Qing and Sequoia Capital partner Shen Nanpeng. Such occasions bring these top managers together to meet face to face, whereas normally they only make contact in the virtual world.
“We pick a topic for every salon, during which participants share their experiences of success and, more impor- tantly, the latest information and trends in the industry. Salons resemble interactive lectures, and our members love it,”said Bao. Since its opening in August 2011 3W has organized 150 salons, and its membership has expanded to 10,000. It has also set up a 200-member panel of trade consultants.
Customers Aplenty
The boom in China’s e-commerce and mobile technologies industries has lured a growing legion of IT technicians into self-employment.
Zhongguancun, an enclave in Haidian District known as China’s Silicon Valley, is home to Internet mammoths like Tencent, Sina and Sohu. Office occupation rates in Zhongguancun are close to capacity, and rents have skyrocketed. Many companies hold business talks outside their offices, stoking the need for informal venues in the area. And nothing is more fitting than a café.
From Monday to Friday a cohort of businesses like managed funds, banks, law firms and technical solution providers run information desks in Garage Café, courting potential customers by offering free consultations. Outcomes from such consultations help both sides. At 3W investor representatives come to meet start-up entrepreneurs every Thursday afternoon. Such face-to-face talks have been held between 150-odd startups and two dozen investment companies in less than a year.
Su Di is frank when he admits that only a small proportion of capital seekers here finally clinch a deal. But he says that every visitor can walk away with inspiration and guidance from those with the same aspirations and similar backgrounds. “No money tree is going to sprout up right in front you,” he joked. The role of theme cafés in nurturing nascent small private businesses is appreciated by the local government. The Administrative Committee of Zhongguancun Science Park has granted the credential of“private business incubator”to the Garage Café and 3W, which allows these companies to enjoy preferential policies on taxation, licensing and other issues. The move joins other recently adopted measures to give a new lease of life to China’s private sector.
“A theme café is nothing more than a conduit to business resources and information that increases fledgling companies’ access to capital and markets,” Su says. As is written on the Garage Café’s message board: “A start-up is like a seed in a wild forest. Its planter should be clear what he wants the seed to grow into, and be aware that the amenities of a green house are unavailable.”
