Ahren Alexander, founder of Audiovert, pitches his product during the Sino-U.S. Innovation and Entrepreneurship Competition.(Audiovert photo)
Chinese investors have their eye on the Chicago startup scene, and the Chicago Innovation Exchange is working to turn that interest into relationships.
The University of Chicago-based startup and innovation hub formed a partnership last summer with Shandong University with help from World Business Chicago. The aim was partly to give pointers to the Qingdao, China-based school on plans for its own innovation hub.
But the relationship also exposes Chicago entrepreneurs to Chinese investors, said John Flavin ?, executive director of the Chicago Innovation Exchange.
“You have these entrepreneurs hungry for capital. ... It’s not always available in traditional seed capital sources, so foreign investors can be an ideal source of that type of investment," he said.
The Chicago Innovation Exchange brought Chinese investors to town in February for a regional pitch competition. Representatives from the four winning teams — NETenergy,Reliefwatch, Tovala and Audiovert — will now head to Qingdao to compete against 75 other teams from throughout the world for a share of $130,000 in prizes.
The Sino-U.S. Innovation and Entrepreneurship Competition is co-hosted by the Qingdao Municipal Government and Shandong University. It's meant to introduce entrepreneurs to the startup climate in China and give them a chance to expand their business there.
Up to 2,000 square feet of office space in Qingdao’s Sino-U.S. Technology and Innovation Park is up for grabs as well. The local teams leave for China on Wednesday.
The investors are very interested in innovative ideas coming out of the U.S. and “are hungry for talent and tech that they can either invest in or play a part in the development of in their own market," Flavin said.
China’s manufacturing economy is slowing down, and some are looking to the tech world to pick up the slack. The government has been encouraging tech investments with subsidies, and university-affiliated and independent incubators are on the rise.
Chinese investors often are willing to take more risks than U.S. investors, Flavin said. They tend to focus on technologies that could take more time or money to develop, such as those in energy or biotech.
Flavin said money is coming from government-subsidized investment funds, wealthy individuals and corporate venture capital groups.
Ahren Alexander, founder of pitch competition finalist Audiovert, hopes to make connections when he travels to China that will aid in hardware production. Audiovert lets customers design their own speaker systems, then manufactures them.
Alexander, a student at Northwestern University, founded Audiovert last August. The company has raised more than $13,000 through crowdfunding and investments from Northwestern’s accelerator, The Garage.
Other Chicago-area startups are drawing attention from China as well. Chinese social media company Renren led a $22 million round of funding for on-demand staffing startup Shiftgig in November. Petronics, a home robotics startup based at University of Illinois Urbana Champaign's Research Park, went through an accelerator program in China in 2014.
And on a larger scale, Alibaba Holding Group bought a 5.6 percent stake in Chicago-based Groupon in February.