China, the first market in the world and the most populous country on earth. A few years ago, many considered China as a country “in development”, but is now on the way to become the 1st economy in the world, but also to overpass Silicon Valley while becoming the biggest startup ecosystem in the world.
Many people still see in China the bad reputation of “cheap products” and “bad quality”. But this time is over. Time to grow up!
This is China:
- The constant rise of the purchasing power, with +6.6% in 2018
- Raise of the average minimum income
- Middle-class development with around 350 to 400 millions peoples
- GDP: $14,217 trillion in 2018
- The country with the greatest number of rich persons in the world
To all ambitious entrepreneurs, we’re telling you: Come to China! The second most important country in the world in terms of foreign investment, people are consuming more than ever, and technological development made China the country with the most opportunity for foreign startups.
Because we’re nice and impatient to manage your money, here are 10 tips for you to raise funds in China. And real tips, no bullshit.
#1) Prepare your Pitch
For those who don’t know, a pitch is like a short introduction. Mostly prepared through PowerPoint, Keynote or Prezi (it has to look nice), it gives your audience a resume of your project, and most importantly, a resume of your business plan.
Pitch deck is something we use mainly during a face to face or online interview with investors. But it has to be short. You should be able to introduce it in around 10-15min.
And that’s: A W E S O M E
It resumes everything, meetings don’t take hours, and it gives you the opportunity to know your project by heart as a kid his lesson. Which is cool, cause if your audience gives you an average of 10-15min to do your speech, sometime you may find people asking you to resume everything in 2min.
The more simple it is, the better.
For more information, you can check some Pitch Deck’s templates right here!
#2) The Business Plan
It’s a document resuming all important information about your project, but also establishing your future objectives and the strategy to reach them. It’s a key communication element for your company. It will allow you to solicit both internal and external partners.
It’s extremely important! Be sure that your BP will be checked carefully to measure the viability of your project.
Don’t forget that an investor doesn’t only want something to put his money on, he wants somebody to believe in (and make money).
Make him dream about your project
An MVP or Minimum Viable Product is a product almost complete, allowing you to do a trial on the market and implement the last modification if needed. Moreover, it’s a capital element to show your investors. An MVP is factual, tangible, touchable (according to your project).
As an example, recently a startup wanted to raise investment for its APP project. They arrived on time at the meeting, dressed nicely, brush their hairs, get their BP and pitch deck ready, AND they offer the investors to download an MVP of their product to try it out.
Because yeah, no investor will put money on an idea. You need to get something done. Something working.
In China, you’ll find plenty of investors. But even if they have a lot of money to invest, they won’t bet on Mr. Nobody. What do they want? A Champion.
And what is a champion? In our context, it could be a company/startup which is making money, with a strong growth rate and impressive forecast.
Chinese maybe a little bit shy sometimes, and it’s pretty rare to see them investing in first round. They’re more kind of 2nd or 3rd round guy. However, if you manage to raise enough capital by yourself and to develop your business efficiently, you may be lucky enough to raise investment.
To resume, show them your potential. Let them believe in you.
#5) How much?
You can’t meet an investor without knowing how much you’ll need. It will only tell him 3 things:
- You have no vision
- You’re not prepared
- You’re wasting his time
An investor is mostly a financial guy. And in finance, we talk “cash”. Therefore, you should be able to come up with figures following your objectives and strategy. Then, your sponsor will be able to negotiate with you properly and make some suggestions.
Even before meeting investors, if you go through an intermediary, we’ll ask you this question: “how much you need?”. Because according to your needs and your project, you won’t be introduced to the same investors. Some are specialized by industry, others according to the type of fund you need, etc.
Do you plan to grow your business as fast as possible in order to sell it to a big company? Do you plan to grow steadily until you own the market? In both cases, we’re back with the same question. “ok, but how much you need?”
#6) Connect to the market
In China, they have no Google, no Facebook, no Instagram, no YouTube, etc. They live in a close communication system, which means that they don’t know you.
As logical as it may sound if they don’t know you, they won’t invest in you.
So, how to get visible in China?
First, you have to develop a Chinese Website. They’ll need to access a minimum of information about your company. Your website should include:
- A Chinese name
- A Chinese server
- Perfect translation in Chinese
- Features and design following Chinese norms
Second, for more efficiency, you can open an official Weibo account.
Weibo is like the Chinese twitter. Probably the most popular social media in China. A great tool that will give you access to a large audience, but also to engage with your fan. This platform will give you great visibility. Perfect to develop your influence in China.
Between the website and the Weibo account, you can be sure to be listed on Chinese browsers.
#7) Your Branding in China, that’s what everybody care
You need to understand something. In China, a good reputation is mandatory to do business. You can’t do anything without reputation, even with the best project in the world (except if you’re called Elon Musk).
For a long time, China suffered from this image of fake products and counterfeits. So, from now, consumers don’t believe anymore in corporate communication, and all the local economic actors consider trust as a key element and only judge about company credibility.
Whether you plan to sell, open a shop or raise investment, without a good reputation you’ll do nothing. And let’s be clear, we’re talking about your reputation in China. Your past reputation in your home country is non-sense here.
How to hack your reputation?
In China, it mainly goes through social media. You’ll need to have a big base of followers, writing articles, share content with your fans, etc.
To convince a country, especially China the king of copy and counterfeits, you’ll have to make up your own celebrity among the population. Preach the wrong to get the truth.
And it goes on:
WeChat is like the Chinese Facebook. Everybody uses it in China. A great messenger APP that also gets a “moment” system allowing people to share content (messages, pictures, videos) and personal feedback. Through this app, people use “WeChat groups” to communicate solutions about their problems and therefore recommending brands or products. Not very efficient for direct advertisement but a super tool for community management and building engagement. You can also create your own groups through the APP.
- Douyin , the video dominant platform in China
A short video sharing app growing very fast among young generations. It’s the perfect app to generate content and spread it to a wild audience. More intuitive and fun than WeChat and Weibo, this app is also an amazing tool for KOL.
#8) PR and forums
Have you ever heard about Baidu?
It’s the Chinese Google. And they use it as much as we use Google… maybe even more. Before buying anything, they’ll search for information about the product or the brand. It can be reviews, comments about something specific, forums, or general research to solve a problem they may have.
Before purchasing a product, they will compare different brands and will be influenced by other’s comments and reviews. Here’s how to optimize your online reputation:
- Baidu Zhidao & Zhihu: a good way to deliver information.
- Baidu Baike: it’s kind of the Chinese Wikipedia. And they trust it a lot here. So, we advise you to make up your own page.
- Forums: it’s important to develop your online presence. The more people talk about you, the better.
- PR: people want to read articles about you. Whoever you are, if no media talk about you then you’re not worth it.
- Comments/reviews: Chinese people are always giving a comment or review about what they bought/consume. And you’ll need plenty of positive comments to convince distributors and investors.
#9) Leverage user&client via Advertisement & PPC (Pay Per Click)
You may know that nowadays, you have the possibility to buy keywords in your industry/market to improve your references online. A paid service allowing your product to be first ranked on top of search results.
And let’s be honest, if you reach Baidu top rank, you can open the champagne! You won’t be a millionaire yet, but the Chinese will trust you. A big step would have been done. With 70% market share on the Chinese internet, Baidu is the best tool to make you gain visibility among investors. A strong presence on Chinese keywords will complete your SEO efforts.
With online ads, you can invest in PPC. It will allow your ad to get good visibility at a low cost. Indeed, as explained by its name, you’ll just have to pay if someone clicks on it.
#10) Active Prospection: yes we can!
If reaching the prospection level, it means that you’re already visible and well-known all-around China. You had overcome many steps and many challenges. Congratulations, that’s excellent.
If you have done a great job, investors may contact you by themselves. You won’t have anything to do about it but signing papers.
However, if you need to look for investors, be confident. With all the previous steps done, you get a high chance to end up negotiating a contract. Show them your talents, your potential, and good ROI.
With good preparation, good visibility and reputation, you’ll just have to get ready for Baijiu and develop a successful company in China.
For any question about raising investment in China, please feel free to contact us.
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