LACK of experience and financing are common obstacles confronting young people who want to start up their own businesses.

In the Minhang District, efforts are under way to assist budding entrepreneurs.

The Shanghai Zizhu Start-Up Fund, with 17 million yuan (US$2.6 million) of financing on tap, was set up several years ago to provide interest-free, unsecured loans and business training to people between 18 and 35 years of age.

The two-year loans, ranging from 50,000 yuan to 100,000 yuan, are provided under the auspices of grants from the Zizhu Science Park, the Minhang Science and Technology Commission, and Youth Business China, a nonprofit group.

Loan applications are vetted and approved by Youth Business China, which brings together 100 business people and academics who volunteer to mentor young entrepreneurs.

Borrowers who repay their start-up loans within the first year are eligible for further loans up to 300,000 yuan.

Those are the dry facts about the program. But how does it work at the personal level?

We talked to two beneficiaries who have just returned from attending the Annual Meeting of the New Champions 2011, also known as "Summer Davos," held last month in the northeastern port of Dalian.

Xue Song and Dai Tiantian represented Chinese youth start-up businesses at the conference.

Third time lucky

Xue Song, 29, is chairman of Ruiyi Medical Tech Co., a company he started in 2006 that received loans and training help provided under the program. That assistance included initial rent-free premises in Zizhu Park.

His company, which focuses on research, development and production of carbon silicate compounds, reagents for organic synthesis and pharmaceutical raw materials, now employs more than 100 staff and generates annual revenue of 30 million yuan.

"I think the district attaches great importance to assisting in the dream of many young people to start up their own firms," Xue said of the program that helped him.

The Jiangsu Province native studied at the Shanghai Institute of Organic Chemistry at the Chinese Academy of Sciences, embarked on a path toward a doctoral degree. But postgraduate work didn't fire up his imagination as much as the dream of starting his own business.

"I wanted to do that, but I had no experience and no channel to open into the market," he said.

A project he had worked on while at school provided a starting point for his fledgling business aspirations.

He had developed an anti-fogging agent for cars and buses windows that, once sprayed on the glass, kept it clear for six months.

"Using air-conditioning to dispel steamed-up windows is costly," he said, "and constant manual cleaning is so time consuming."

His cleverness was logical, but turning it into a marketable product was no easy feat. Dai managed to get funding from the program and mentoring help, but he found it difficult to get customers.

"It is hard to summarize what caused the business to fail," he said. "In the end, I just found it difficult to make money."

Xue was down but not defeated. Next he dabbled in the field of research and development outsourcing services for software and drug synthesis.

Again, he failed, blaming lack of management skill and innovative concepts in an industry rife with competition.

"The anti-fog agent project died quickly, and the second business took more time, about one year, before I finally decided to give it up," Xue said.

He then established Ruiyi and it was third time lucky.

Xue located his sales center in Shanghai and a production center in his hometown, Haimei, Jiangsu Province. The company has doubled its revenue every year and now is shipping products overseas.

Xue said he the path to successful business start-ups entails trial and error, flexibility and patience.

"You can't stick to something that is doomed to failure," he said by way of advice to others. "Give it up and try something else."

Careful look

Dai Tiantian, 29, still maintains the appearance of a university student though he left the Jiao Tong University campus several years ago after earning a master's degree in electronic engineering.

Today he is chairman of Friendess Electronics Co., a company he founded to provide motion control and computer numerical control solutions.

He said he owes his initial success to Gong Jun, a senior engineer and chairman of Shanghai Ananda Drive Techniques Co, who mentored him for three years under the Zizhu program in 2008.

"When I talked about my business blueprint, Gong listened carefully without interruption. Then he pointed out the problems and potential risks of my ideas," Dai said. "It was very helpful."

Because of Gong's suggestions, Dai cooled his unbridled zeal to set up a business immediately and took a more careful look at the details of how he would do it.

He also received loans from the Shanghai Zizhu Start-up Fund.

Dai actually took his first step into entrepreneurship while still in university. During a summer break, he and five classmates each invested about 50,000 yuan and set up a company to make a robot-dispensing machine.

They started selling the control system for the machine, priced at 5,000 yuan, but found few takers among companies they contacted.

"It was really an extremely difficult time," Dai said, recalling life in a small, cramped apartment after completing his campus studies and grimacing at memories of lettuce lunches to save money.

It was Gong to the rescue again. He advised Dai to adjust his business strategy to put customer needs first.

So Dai conducted surveys among potential customers, asking them to present proposals outlining their needs. The young company then amended its automation system tailored to those needs.

At the same time, Dai launched some online promotion to save costs. The company posted advertisements at business-to-business site operator Alibaba.com and teamed up with Leetro Automation Co.

Sales started to pick up. Dai and his team updated their system and lowered its price to less than 2,000 yuan. Sales picked up faster.

The company has since expanded its business to include systems for laser-cutting, numerical control and flat-panel display testing. Its products are exported to Indonesia, the Ukraine and Morocco.

The company now employs 12 staff in research and development, marketing, business development and manufacturing. It has been generating almost 2 million yuan in revenue every year.