In what is a fairly unusual move, last week, Tradesparq (www.tradesparq.com), a Chinese startup in the area of B2B trade information, said it was planning on setting up its operations here in Southern California, as part of an expansion and scaling of the company. We caught up with co-founder Michael Kleist, to learn more about the startup, its roots in China and international trade, as well as learn more about the startup experience in China--and why having a presence in Southern California is important to the company.
What is Tradesparq?
Michael Kleist: Tradesparq is a B2B trade platform. The crux of it is we help buyers user their network to verify suppliers, primarily in Asia and China, where we started. We then add things like ratings, and then shipment data. We get a record of every waterborne shipment to the United States, match it to our database, and then allow buyers to follow and track which companies are shipping into the United States. It's a social network for world trade, kind of a combo between Alibaba and LinkedIn. We've now reached critical mass in content, and in Asia we're number three in the amount of information on products and suppliers online.
How long has company been around?
Michael Kleist: We started in 2010. My business partner and I left one of the competitors in the space, Global Sources, which is based in Hong Kong, and formed this company. In 2011, we built our site, and in 2012, last year, we started getting content. We went from no suppliers to now over 160,000 suppliers, over two million products online.
Tell us about your plans to open up your operations here in Southern California?
Michael Kleist: My business partner and I were both originally from San Diego. We started our company in China, however, for two reasons. It was cheaper on the tech side, because we were bootstrapping, and also we needed the content to start getting buyers. We focused almost entirely last year on content. Now, we're looking at Southern California because there's lots of talent in the area of design, and we also want to start targeting enterprises here who want to start sourcing products in Asia. And, because there are many companies in Long Beach and sourcing operations here, it really made sense to open up operations in Southern California. We'll mostly be doing enterprise sales here, but also looking at the technology and design front, hiring better talent, taking design to a new level than maybe what we are in China. No knock on China, but with LA having the advertising agency we think we'll be able to improve on the design side on our site.
Tell us about your backers?
Michael Kleist: We're seed funded, and have already raised money from twelve investors. Four of them are institutional, including Siemer Ventures in LA. Almost all of our investors have a manufacturing background, so they really understand what we're trying to do. We're now in the process of raising a Series A, now that we're generating revenue and growing really quickly. It's now time for us to scale, particularly as the cost of servers, mail, has increased. We need to raise a Series A to scale.
What's the biggest thing you've learned about starting a business in China?
Michael Kleist: Oh gosh, that could be pages. First of all, we were a couple of foreigners starting a company in China. On the fundraising side, we heard a lot about how could two foreigners do a business in China. We kept explaining we're a global business. But, even just starting a company in the country was a challenge. We had to create a foreign owned enterprise there, had to deal with a lot of legal and accounting issues. People don't know that in China, you have to do your accounting every month. You've got to do your report every month. All the HR policies are completely different. It's also a dog-eat-dog world over there with the competition. Getting the talent is an issue. If you get great talent, they immediately want to go start their own company that is a copy of what you're doing over there, so you have to be really cognizant of that. There's a million things. That said, it's actually easier than you might imagine. Once you know the space, China really helps entrepreneurs. Promoting global trade really helps China, so they really help companies like ours. The cost of business is not so bad. Tech costs are cheaper, though it's rising. There are some challenges, though. Look at something like banking. We opened up an office in Shanghai, and we have marketing in Hangzhou. However, you have to open up a sub-company in Hangzhou, because it's a different city. The Shanghai company has to have a sub company because of the operations in another city. There are different social insurance policies, different banking. Those are the headaches. But, you can overcome it.
Was language an issue at all for your company?
Michael Kleist: No, Brian Hager, my business partner is fluent in Chinese, and my Mandarin is okay. Our CTO is mainland Chinese, but was educated here. Everyone else is Chinese. Language was not a problem. The bigger issue was on the other side. We use a lot of open source software, and finding tech guys who can read English to keep up with all of the forums is actually more of a challenge than us speaking Chinese. That's another reason why we're here, because the people who are on the cutting edge are speaking English. Fortunately our CTO doesn't have that problem.
What's your big goal now?Grow, grow, grow. We want to get our Series A in so we don't have to spend time fundraising, and then we want to grow our tele-sales and telemarketing team. By the end of the year we think we will be number two, only behind Alibaba, in products and suppliers, and the only site that is social. That will be a great thing. We want to scale, scale, scale.