In the winter of 2020, while conducting my Ph.D. fieldwork in the southern Chinese city of Shenzhen, I found myself in an unexpected position: startup founder.

Three weeks prior, I had heard about a three-day “entrepreneurship competition” being held in the nearby city of Guangzhou. Such events, often state-backed, are common in urban China, offering young, business-minded Chinese a chance to connect with and pitch ideas to local investors while allowing cities to buff their business-friendly credentials and strengthen their startup scenes. In perhaps the best-known example, an entrepreneurship competition in Shanghai reportedly played a pivotal role in the transformation of the Musical.ly app into TikTok.

Curious, I signed up to take part. As easily one of the least experienced of the 35 entrepreneurs in attendance, many of whom had previous startup experience or backgrounds in engineering or business development, I figured I could spend the competition observing the inner workings of the event. Instead, my pitch — a barebones concept involving connecting Chinese freshmen abroad with mentors at their university that I’d come up with on the train — was selected as one of six ideas worth developing.

The next day, it became clear that my idea wasn’t going to work. A mentorship session with the judges brought positive feedback, but little in the way of practical advice. The more my team — which comprised contestants whose pitches hadn’t been selected — talked it over, the less promising it seemed. But by the time we decided to switch to a travel app offering tips to middle-class Chinese abroad, it was so late in the process that we didn’t have time for even basic market research.

That’s how we found ourselves showing up to the demo day with little more than a hastily prepared slide deck. As we listened to the other teams, it felt like they’d done a better job internalizing the entrepreneurial spirit the mentors — a mix of investors, local officials, and business school professors — had emphasized the previous day. Their pitches were full of key phrases like “AI-enabled,” and “IPO within five years.” The session concluded with generalized praise for the pitches and somewhat optimistic assessments of their viability before the judges retired to a meeting room to pick a winner.

To my shock, they chose ours.

The next few days were a whirlwind of meetups with potential business partners. Several people associated with the contest encouraged me to pursue the project, even as I reiterated my plan to return to university and complete my Ph.D. studies.

Gradually, however, the excitement wore off. Although I quietly thought about pursuing the idea, the investments that had seemed like such a sure thing never materialized. I decided to end the project. But I was left with questions. I was far from the most experienced entrepreneur there, so how had my pitch won? And why had it all come to nothing?

The answers came into focus as I conducted more research interviews with entrepreneurs in Guangzhou and Shenzhen. Many, like me, had gone abroad for Ph.D. degrees before returning to China to start a business. Also like me, many had had positive experiences at entrepreneurship competitions, where their ideas seemed to win out against all odds. These winners often came from similarly privileged backgrounds: They were multinational, well-educated, hardworking, and willing to embrace risk — all traits seen as desirable by China’s talent recruitment programs.

What they didn’t necessarily possess was an industry background, experience building a successful company, or even clear product development plans. Indeed, many said they had struggled after their wins, as turning their ideas into reality proved harder than they expected. The skills that win entrepreneurship competitions, it turns out, are not necessarily the same as those that make for a successful startup.

The investors involved seem to understand this. Just days after the competition, I discovered with shock that another team, which had pitched an “AI-based beauty consumer product,” had secured pre-seed investment from one of the judges on the panel, despite not winning any prizes on the demo day. The founder of that idea was far from an elite entrepreneur, but she had more than 10 years of experience in the beauty industry in Guangzhou.

In contrast, none of the judges who had supported my idea ever reached out with potential investment opportunities. Later, I asked the judge who had bought into the beauty project what motivated her decision. They hinted that the startup team had been developing their product for two years, which disqualified them from winning the competition but made them a strong investment candidate. The decisive factor, however, was domain expertise: While our team lacked significant industry experience or notable connections, the leader of the AI beauty startup had extensive experience and important connections within the beauty industry.

The disparity between the judge’s verdict and their eventual investment decision couldn’t have been more striking. Teams like mine might receive symbolic awards due to our perceived “excellent” qualifications, but entrepreneurs with elite educational backgrounds are especially prone to blunders early in the startup process — something that can be frustrating for those who have invested significant resources and effort in their ideas, only to find that real-world success hinges on factors like industry experience and connections that are not considered in the competition.

Meanwhile, so-called grassroots entrepreneurs in South China represent the flip side of “excellence,” at least as it’s defined by the country’s talent policies. Unlike their transnational counterparts, they often lack experience of the international educational meritocracy, instead hailing from small towns and cities across China. Starting their entrepreneurial journey, they face greater hurdles in accessing resources, as they do not qualify for talent-focused initiatives, and building networks is far more challenging for them compared to the global elite.

Ultimately, the primary goal of entrepreneurship competitions is not necessarily finding the best business idea, but rather cultivating dreams of entrepreneurial success in eligible talents. As scholar Lilly Irani notes in her 2019 study of India’s technology incubators, “hackathons sometimes produce technologies, and they always, however, produce (entrepreneurial) subjects.”

Of course, this doesn’t mean that the idealized entrepreneurial subject projected by state-backed competitions is incompatible with the real startup scene. One overseas Ph.D. graduate I met in Shenzhen attended similar state-sponsor competitions and eventually built a successful high-tech company through a series of trials and errors. In our conversation, he noted that state sponsorship is good but not a necessity. The most important thing for an aspiring entrepreneur, he emphasized, is “to continue to create value for the market.”

It’s been four years since I took part in the competition. I now work in venture capital, and I’m finally starting to get what he meant. As Steven Kaplan and Per Strömberg point out in their study of the venture capitalist industry, investors tend to focus first and foremost on the quality of management. A compelling value proposition is key for startups looking to fundraise from investors: If a pitch doesn’t leave people thinking, “Wow, that’s incredible,” it’s not effectively selling the business. Credentials are nice, but if a founder can’t convince a casual acquaintance their idea will work, how will they persuade investors? Defining this early on is challenging, but it’s crucial for success.

But in state-backed competitions, a compelling value proposition is not always essential to win. In many ways, entrepreneurship competitions reflect privileged pedigrees over experience. This privilege can also be a liability, however. True success still only comes when entrepreneurs prove themselves in the market economy.

“(Entrepreneurship competitions) are all well and good,” one tech CEO and former competition winner told me. “However, it was a bit removed from real entrepreneurship, because real entrepreneurship isn’t fun.”

Given the ongoing emphasis on mass entrepreneurship in China, it may be time to reconsider our standards for recognizing talent and to focus resources on supporting those with viable business pitches from the outset.

Editor: Cai Yineng; portrait artist: Wang Zhenhao. 

(Header image: Ingram Image/INGRAM/VCG)