Rise of the new breed of Internet entrepreneurs

Alibaba, Baidu and Tencent are seeing some of their most talented staff leave to set up or join online startups as venture capital funds move into the market

It was like a magic spell that left Li Guoxun entranced. In his head, he kept hearing the words: "Go and do something that will make an impact".

Li did and left his job as a senior manager at Baidu Inc, one of China's Internet heavyweights. In April, he went to join Yicuntongda (Beijing) Network Technology Co Ltd, a four-year-old tech firm specializing in the agricultural sector, as vice-president for marketing.

"The idea to be part of a team that has the potential to reshape the distribution of farm produce in China excites me," Li, who worked for Tencent Holding Ltd for two years before joining Baidu in 2011, said.

His new employer is based in Beijing and developed a mobile app called Yimutian, which helps put farmers in direct contact with potential buyers.

"By cutting down the cost and time of dealing with middlemen, farmers can improve their incomes and buyers can get hold of fresher farm produce," Li said.

So far, Yicuntongda has handled transactions on its online platforms, such as the Yimutian app and website, worth in excess of 10 billion yuan ($1.61 billion) between last July and May this year. No other figures have been released by the company.

For Li, it was the right time to branch out and take on a new challenge. In fact, he is part of a growing group of highly skilled Internet savvy people who are jumping ship from China's brand leaders, such as Baidu, Tencent and Alibaba Group Holding Ltd, to set up or join new online ventures.

The country's booming tech industry is hungry for experienced talent, and staff at the Big Three are being targeted by venture capital companies looking to invest in online startups.

Robin Li, head of Baidu, the largest Internet search firm in China, pointed out that cafes near the company's plaza in Beijing are filled with budding investors. "They sit there everyday, talking to our employees in the hope of persuading them to set up their own businesses," Li said.

What is usually on offer can tempt the brightest and the best to leave as substantial funding can turn their startup dreams into reality.

One "poaching technique" went viral earlier this year. It showed the founders of a startup company picking up employees in cars. Once in the back seat, they were handed a sales pitch as they were given a ride home from work.

According to industry insiders, this is just one of the "methods" used. ZhangTong, who quit his job as a product expert at Alibaba the day the company became the world's largest initial public offering last September, said the online sector is a wash with cash.

The sluggish property market in China is one of the main reasons that venture capital companies are moving into the high-growth Internet market .

Last year, venture capital investment in the country's tech sector more than doubled to $6 billion from $2.8 billion in 2013, a report from AVCJ Research, which specializes in information on Asian private equity, venture capital and mergers and acquisitions in Hong Kong, showed.

Statistics compiled by AVCJ revealed that the amount of early-stage funding for Chinese tech startups, including seed capital, surged to nearly $2 billion last year. In 2012, it was just $313 million. Since then, deals have also increased to 299 from 172.

Zhang rubbed shoulders with the venture capital boys when he worked at Alibaba. "When they heard my plan to set up my own business, they immediately decided to invest millions of yuan into the project even though they had no idea what I was going to do," he said.

The 33-year-old walked away from stock options worth more than 10 million yuan when he left Alibaba and an annual salary of about 500,000 yuan.

But he does not regret it. Along with five other Alibaba employees, he co-founded Hangzhou Tuotuo Network Technology Co Ltd and launched a software app called Kedouinc, a popular music platform, in March. The company now has 20,000 users, but as yet has not reported detailed financial numbers.

"To start something from scratch is very difficult," Zhang said. "But for those that are passionate about building a company on their own, this is the right time to do it in China."

More tech specialists, he added, are ready to ride this new entrepreneurial wave, which has been supported by the government. Earlier this year, Premier Li Keqiang announced steps would be taken, including lowering taxes, to boost entrepreneurship a cross the business spectrum.

State backing has also brought the sort of "hot house" atmosphere found in Silicon Valley to major Chinese cities such as Beijing, Hangzhou in Zhejiang province, and Shenzhen, the three areas where Baidu, Alibaba and Tencent are located.