Many of China’s deep tech startups are having a deeply tough time. Many of these companies, founded by industry-leading researchers and funded by expectant venture capitalists (hoping to find the next BYD or CATL) , face a lot of challenges in China’s Darwinist industrial competition.
Someone recently wrote a satirical summary about the state of these startups – before and after they receive investment. It is structured in a series of questions and answers. We have translated the satire into English:
Pre-funding
- Asked about R&D? “Top-tier talent.”
- Asked about the team? “Thousands strong.”
- Asked about specs? “World-leading, obviously.”
- Asked about clients? “All industry giants.”
- Asked about production capacity? “Factories under construction.”
- Asked about rivals? “Totally weak.”
- Asked for financials? “Not available, sorry.”
Post-funding
- Asked about gross margins? “Negative, but strategic.”
- Asked about sales? “Sold out everywhere.”
- Asked about revenue? “All in promissory notes.”
- Asked about client payment terms? “Half a year, at best.”
- Asked about paid-in capital? “Still zero.”
- Asked about HQ? “Can relocate anytime.”*
- Asked about IPO coaching? “Fast-track green lane.”
- Asked about the (IPO) filing date? “Next year, for sure.”
*(Note: many Chinese deep tech companies are relocating their HQ outside China to escape the China-US geopolitics. For example, Manus.ai, the Benchmark-funded general AI agent startup, has recently relocated its HQ to Singapore.
Bright future
- Asked about the product? “Pivoting again.”
- Asked about the team? “Trimming as we speak.”
- Asked about cash flow? “Running on fumes.”
- Asked about the cause? “Industry is too competitive.”
- Asked about countermeasures? “We’re chillin’.”
- Asked about (investor) exits? “Still waiting.”
- Asked about buybacks? “That’d bankrupt us.”
- Asked about the company chop*? “Being fought over.”
- Asked about the boss? “Nowhere to be found.”
- Asked about the co-founder? “In court.”
(Note: In China, the company seal (“chop”/“公章”) holds legal authority to sign contracts, authorise decisions, and access company assets – so possession of the chop effectively means control of the company, which is why co-founders sometimes fight over it.)
