In a WeWork office overlooking central Shanghai, a cohort of Scandinavian entrepreneurs pitch to a throng of investors, startup folk, and fellow northern Europe expats. It’s the debut of nHack, the first accelerator in China designed exclusively for Nordic startups interested in the country’s enormous market.
The goal is to pair great technology and design from Finland, Sweden, Norway, and Denmark with Chinese investors, business partners, customers, and the country’s hardware supply chain.
You need to be in China to succeed in China.
“From experience, you need to be in China to succeed in China,” Jon Stø, partner of nHack, tells Tech in Asia. “I think very few companies succeed in China by sitting in their own country and trying to remote control [from afar].”
The accelerator, which formally launched last Wednesday, will invest US$25,000 to US$100,000 into accepted startups in exchange for seven to 10 percent equity. Follow-on funding after the program is also an option, depending on the startup’s performance. The program will run for three to five months and plans to organize a demo day for its startups on December 6 and 7.
So far, nHack is only accepting Nordic startups. The current batch includes hardware, virtual reality, agriculture tech, and gaming companies.
When I ask Stø about China’s notoriously cutthroat market – especially for hardware companies – he remains optimistic.
“Of course I think there are challenges in a foreign market, especially in a market where you don’t speak the language and there are cultural differences,” he says. “At the same time, I think, if you have a good product […] you will get business in China.”
The past few years have seen a slew of overseas organizations, such as Chinaccelerator, StartupEast, and Startupbootcamp, enter China in hopes of helping entrepreneurs from their respective countries succeed in Asia’s largest market. At the same time, local governments and organizations in China have been opening their doors to foreign tech talent.
The Nordic region, whose combined population roughly equals Shanghai, has seen an increasing amount of cross-border activity with China. Slush, a volunteer-run startup conference born out of Helsinki, Finland, launched its first conference in China last year. 2016 also saw Tencent’s US$8.6 billion acquisition of Finnish gaming company Supercell, maker of Clash of Clans.
The Chinese tech giant was also rumored to have approached Swedish unicorn Spotify for acquisition earlier this year before being rebuffed, according to TechCrunch.
We want to bring Nordic companies first to Shanghai, then to China, and then to Asia.
“We want to bring Nordic companies first to Shanghai, then to China, and then to Asia,” says Stø.
NHack plans to open a series of vertical-focused accelerators in China, including Beijing and Hangzhou. nHack’s Shenzhen accelerator, which is slated to launch next March, will focus on smart hardware and IoT. Stø says the accelerator is aiming to bring in 30 startups each quarter.
In addition to mentorship, the accelerator will help companies connect with the right partners, whether they’re looking to crowdfund, find investors, or optimize their production process. NHack is also mainly focusing on companies that have raised funding before. In fact, most of its first cohort has a product, such as underwater drone company Blueye Robotics – which has already nabbed funding from local investors in China.
“It’s not so interesting from zero to one,” says Chris Rynning, partner and co-founder at nHack, who has lived in China for 20 years. “But once you have a paying customer, you go from one to 100 in value creation.” The goal of nHack, he explains, is not to focus on pre-seed or seed stage startups, but on companies that are ready to find customers, scale their business, or iterate on the next generation of their product through rapid prototyping.
Currently, nHack is partnering with Innovation Norway, a commercial arm of the Norwegian government, and Danish bank Danske Bank. Both entities are sponsoring and funding nHack’s accelerator program and investment fund. In China, the accelerator is a partner of WeWork and cooperates with Slush China.
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