Yi Cao: The More Cross-Disciplinary a Startup, the Higher Its Odds of Success

In 2015, the success rate for internet startups in China hovered around just 5%. Behind this brutal statistic lay the confusion of countless entrepreneurs: How can I improve my odds of success? How can I break through in the shadow of internet giants like Tencent and Alibaba?

Yi Cao, founder of Source Code Capital, shared his perspective today at the "Chinnovation Autumn Summit" in Hangzhou:

Just as collecting all seven Dragon Balls summons Shenron, the more cross-disciplinary a startup becomes, the more success factors it needs to assemble—and the higher its probability of success.

As a super-connector for industrial capital, Source Code Capital aims to help innovative enterprises collaborate with capital partners, using both financial and industrial capital to jointly drive the innovative development of traditional industries in the internet era, helping more cross-disciplinary ventures realize their value.

Cao noted that the now-familiar concept of "Internet Plus" was itself a classic example of cross-disciplinary entrepreneurship from the start. The three major portals—SINA Corporation, NetEase, and Sohu—initially took the form of newspapers and magazines and moved them online, achieving a simple cross-disciplinary leap of "Internet Plus Print Media." But this crossover required entrepreneurs who understood both media and the internet. Many media professionals at the time failed to seize the entrepreneurial opportunity of Internet Plus Media.

Cross-disciplinary entrepreneurship continues to evolve and extend through the information revolution. "Internet Plus" is deepening into more industries. Industrial internet, for instance, involves retail, traditional distribution, and more compared to Internet Plus Media—raising the entrepreneurial threshold and making cross-disciplinary efforts more difficult. At the same time, there are relatively fewer competitors, and the success rate is higher. When entrepreneurship advances to the AI era, founders must not only understand their industry but also leverage AI technology, infrastructure, and concepts. The bar is higher, and correspondingly, the opportunities for innovation are greater.

As for entrepreneurs' concerns about internet giants squeezing their survival space, Cao said there's no need for excessive worry. Over the past five years, industrial capital represented by Tencent and Alibaba has indeed grown increasingly influential, but every industry goes through phases of business model transformation. Xing Wang of Meituan once said we've now entered the second half of the game. The first half saw many large players occupying the high ground, but four variables below still leave enormous potential for entrepreneurship:

First, talent is mobile.

Second, capital is mobile.

Third, policy has an impact—for example, antitrust regulation.

Fourth, technological infrastructure undergoes disruptive change.

To begin with, within large corporate systems, talent will break out on its own—truly genius-level individuals will proactively jump ship.

Second, while BAT has deep pockets, capital outside of BAT has also grown substantially. Capital will still favor promising innovative projects.

Moreover, as business models evolve, every sober company has its boundaries. Tencent currently focuses on just two and a half businesses: instant messaging, digital content distribution, and half of media. The rest is ecosystem investing—whether in mobility with DiDi, food services with Meituan, or e-commerce with JD.com—where Tencent enters fields outside its expertise through strategic investments of 15-25%. Entrepreneurs need not deliberately reject these strategic investors, because if utilized properly, they can help projects grow faster.

Cao cited Yijiupi, a Source Code Capital portfolio company, as an example. It supplies alcohol and other fast-moving consumer goods to 15 million restaurants and convenience stores across China. Source Code helped bring in Meituan as a strategic investor for Yijiupi. The business synergy was direct and immediate: Meituan's 4 million merchants became Yijiupi's most direct and effective customer base. This promising outlook from combining with industrial capital helped Yijiupi quickly close its Series C round.

Cao emphasized that Source Code Capital will serve as a super-connector for industrial capital, helping innovative enterprises partner with both industrial and financial capital, enabling more cross-disciplinary ventures to stand out.