Technology

Alibaba Turns To Entrepreneurs For The Next Phase Of Growth

Chinese e-commerce giant Alibaba has been investing in promising startups for years. In recent months, there have been speculations that the slowing Chinese economy may hamper consumer demand, which would affect Alibaba’s core business. Now the e-commerce giant is increasingly focusing on startups that would help it expand its business.

Alibaba Turns To Entrepreneurs For The Next Phase Of Growth

Alibaba sets up funds in Hong Kong and Taiwan

The company has started searching for the next-generation of entrepreneurs in Hong Kong and Taiwan. The company has launched a $130 million Hong Kong Entrepreneurs Fund and a Taiwan Entrepreneurs Fund with $306 million in cash. The funds are not-for-profit initiatives that Jack Ma flagged in February this year. Alibaba vice-chairman Joseph Tsai said it’s “not a charity,” meaning entrepreneurs will have to go through the same process that they go through to raise venture funding.

Since these are not-for-profit initiatives, the e-commerce giant will help entrepreneurs become successful, make money, and then put that money back into the fund to help more startups. The Hangzhou-based company has appointed Gobi Partners as the first investment manager for its Hong Kong fund. The Taiwanese fund will be managed by a subsidiary of China Development Industrial Bank.

The startups’ operations must be based on Alibaba’s ecosystem

However, there is a catch. The startup’s business operations must be based on the Alibaba ecosystem, including Tmall, Taobao, its cloud computing arm Aliyun, Alipay, or other affiliated companies. The startup team will also have access to the company’s services, technical assistance, and training. It means Alibaba is only looking for companies that offer synergies with its core businesses.

Another qualification requirement is that the startup must be a local one. The Taiwanese fund will support only Taiwan-based startups and the Hong Kong fund will focus on companies started by permanent residents of the city. Having access to Alibaba’s massive network of e-commerce and related businesses would give entrepreneurs a “huge competitive advantage.”

Alibaba shares fell 0.31% to $77.63 in pre-market trading Friday. The stock is down 25% year-to-date.

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