As the People’s Republic of China (PRC) is fast becoming a haven for all sorts of tech entrepreneurs, many of these need help from firms such as Legend Star. This company—which is part of the Lenovo group—is one of the country’s first tech incubators, and a pioneer in the creation of a skills training program for new tech CEOs . We sat down with Legend Star Executive Director Gang Lu to learn more about the company’s business model, and how it decides which entrepreneurs to back. Legend Star was one the first tech incubator firms to emerge in the PRC back in 2008. What was your biggest challenge when you were just starting, and what lessons have you learned about the business so far? I think the core challenge for our company was how to figure out a case for sustainable development for the business. We needed to find our own business model, and always be ahead of the curve. At the same time, we needed a business model that could also be replicated by other similar incubators, so together we can achieve scale and gain influence. You mentioned that other incubators are learning from you, in particular from your systems training program. How can that be applied in other developing countries in Asia and the Pacific? The core issue is choosing the right entrepreneur, and later finding out how to help them. These are the two main challenges.
To address these questions, we first put considerable resources into selecting the most outstanding entrepreneurs. We pick them from across the country, and to maximize efficiency and value, we only choose the best of the best. We spend a lot of time and energy on this.
Second, we cultivate entrepreneurs —we invest in them. Most cannot pay much for training, and we don’t want to take all their money, so we decided to take an approach of sharing in their future growth. If we want a share of their future profit, we must invest in an expectation of success, so we become angel investors. We focus on industries with high development prospects: mobile Internet, health, and advanced manufacturing. Then we choose technologies within those industries that we believe are sector leading, have high growth potential, and a large market space.
Third, and possibly most important, we look for a CEO who has a strong capacity for learning, has entrepreneurial passion, and has some basic entrepreneurial ability.
Why is the personality of the entrepreneur so important for you? From our experience over the last decade, we have found that successful ventures have strong leaders who are willing to learn and develop their capacities over the long term, who take a strategic view of the business, and can adapt to change. This is crucial for an investment to develop. What qualities do you look for in entrepreneurs? How do you know you have found the right person? We look at the entrepreneur’s background, what they have achieved, what they have done so far in their life and his career, and how that can prepare them for the future of the company. And of course whether their character is suitable, especially when it comes to learning.