The young entrepreneur we visit today is struggling with the funding for his jellyfish business. The 100,000 yuan start up funding he got from the government is about to run out. But the 100,000 yuan has never been so important to him.
Wang Wenlong has been running his aquarium company for three years. And jellyfish is the only marine creature that he has been cultivating and selling. This year Wang managed to sell 6,000 jellyfish across the country, and he expects the number to increase next year.
Wang Wenlong, GM, Shanghai Lisheng Aquarium
My target is to sell 10,000 jellyfish a year. And if it can be reached next year, my business will be very stable.
But if the start up funding of 100-thousand is withdrawn immediately, Wang’s ambition, even his entrepreneurial dream set up three years ago, will be on the rocks. In summer 2006, Wang Wenlong had just finished his first-year of postgraduate study at Shanghai Ocean University. A lecture by the university’s career center made him think about setting up a company.
During the lecture I learned that university students, even postgraduates are able to get funding from a foundation set up by the Shanghai government if our business proposals can get approved.
In 2006, the Shanghai city government set up an Entrepreneurship Foundation for Graduates, or EFG. 10 million yuan from the government each year would sponsor good business projects by university students and graduates. And every project would be able to get 50,000 to 500,000 yuan to start up when the company was registered. In three years, the EFG has set up 12 offices in different universities and institutes, and has chosen to fund more than 300 companies from a candidate list of more than five hundred projects. To find the most feasible ones, the foundation set up a harsh screening process.
Li Jun, Executive, Education & Research Department, EFG
After receiving the online applications, the foundation would decide whether a project idea could be turned into a reasonable business. The next round was to get five or six industry experts, investors, and marketing consultants to attend a presentation by the applicants, and evaluate the projects and determine the funding amount. The whole process takes a couple of months. Only 20% will finally get turn into a real business.
Wang Wenlong then did research for a month and finally decided to set up a jellyfish business.
The reasons are simple…No one had tried such a business before because there were some technical problems with cultivating jellyfish, but I was confident I could deal with them. Also jellyfish are kind of ornamental sea creatures that help people relax, and they’re used to cure anxiety neurosis overseas.
To help its students’ projects stand out among the more than 500 applications, Shanghai Maritime University invited a team of professionals to teach the applicants like Wang Wenlong about finance, management and marketing. And finally, Wang’s project became one of the lucky 25-percent. He got 100-thousand yuan in startup funding, although he’d applied for TWO-hundred thousand. In September 2006, Wang and his partners finally financed the other 100-thousand yuan they needed with money from parents and family, and set up Shanghai Lisheng Aquarium with registered capital of 200-thousand yuan. The three founders had different responsibilities –one did research, one did marketing and another did the financial control. But they quickly found that nothing matched their expectations.
We had an ideal plan to have marketing and research to develop together. However, we soon realised without good and mature products, there is no market at all, and marketing is non-sense. So we put all our efforts into research and development.
When the business was set up, all the R&D on jellyfish cultivation was done in the University lab. In that limited space, Wang and his partners managed to find the right formula for ocean salt that would let the jellyfish move energetically in salted tap water. They also determined that a fish tank with a cambered shape would allow the jellyfish to live much longer than usual. But while the team celebrated its R&D success, they realized it had eaten up nearly 120-thousand yuan in just six months.
When we were ready for marketing with technology at hand, we needed to expand the production capacity and the market. And the 80-thousand yuan left was not nearly enough.
The university lab where they’d been running experiments could accommodate no more than 100 jellyfish at a time. A good customer might want all one hundred…which would leave them with no inventory. So Wang’s team needed a much bigger tank for a larger stock of jellyfish. So they again turned to the EFG for help. All the offices of the EFG have some cheap or even free office space for the young companies. For example, the one located in the Shanghai technology innovation Center has two entire floors dedicated to these graduate entrepreneurs.
Han Mingyuan, GM, Shanghai Technology Innovation Centre
For those young bosses looking for offices, we offer the space for free for the first 6 months. After that they only need to pay rent that is 40% below the market price. And if they need some laboratories, we will help them find some in the science parks.
Tags: aquarium company, hard money, industry experts, investors, marketing consultants, Shanghai technology, Wang Wenlong
