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January 21, 2011

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City-funded graduate start-ups fail to deliver

ALMOST 60 percent of city-funded start-ups by graduates from a top university have failed or are suffering losses, according to a report issued yesterday.

A study conducted by Fudan University of almost 100 projects featuring its graduates revealed that only 40 of the entrepreneurs managed to balance their revenue and expenditure,

Researchers looked at businesses funded by the Shanghai Technology Entrepreneurship Foundation for Graduates over the past six years.

"The major problems with unsuccessful programs was that their technology failed to meet market needs," said Zhao Wenbin, a university official in charge of funding.

But recipients complained that many firms were prejudiced against them as they are wary of rookie graduates.

Xu Yixin, who graduated in 2009 and set up a company to sell 3D measurement automation equipment, said an auto firm had refused to use his product because it didn't trust fresh graduates.

However, he eventually sold the equipment to it via agents.

"It's not a problem with my products," Xu said. "But I have to hide the fact that I'm newly graduated to win companies' trust."

Pressure from family and friends also causes trouble for graduate start-ups. Guo Wei, about to graduate this year and the founder of an Internet marketing firm, said he came under pressure to abandon the business.

"My mother asked me to quit again and again, seeing my firm has not made profits," he said. "People are impatient for instant success."

About 15 percent of the entrepreneurship projects failed and 42 percent suspended or are suffering deficit. The survey found 43 percent were balancing the books.

The Shanghai Technology Entrepreneurship Foundation offers up to 300,000 yuan (US$45,546) interest-free to promising college start-ups. The sum should be paid back within three years.

More than 30 percent paid back all funding, while the rest have failed to return any or some of the cash.


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