China is making concerted efforts to make startup investment attractive for foreign incubators and accelerators. American start-up incubator Y Combinator is the latest to enter the Chinese market. It will be led by former Baidu chief operating officer Qi Lu. This is not the first time an American player has made its foray into the Chinese market. In 2013, San Francisco-based venture capital firm 500 Startups made its entry in China and since its inception; the accelerator has invested in over 30 start-ups.

Another California-based startup accelerator Plug and Play Tech Center entered China in 2013 and has established offices in five cities (Beijing, Shanghai, Suzhou, Hangzhou, Zhengzhou) where the team invests in and helps both local and global technology companies grow.

By the end of 2015, China had 4,875 incubators, the most of any nation, and up from just 1,600 in 2014, according to a study by Zero2IPO, a venture capital and private equity research firm based in China. Since then the numbers have been growing steadily.

In May, Chinese tech giant Baidu Inc. announced that Qi Lu will no longer serve as a chief operating officer of the company starting in July due to personal reasons.

First International Foray

With its first international foray, Y Combinator‘s largest market will be China. In a company’s blogpost, Y Combinator’s president Sam Altman says, “China had been “an important missing piece of our puzzle—the entrepreneurial energy and talent there (in China) is an amazing force.”

“We believe that technology drives innovation, that startups can do very ambitious things if they think on a long enough time horizon, and that hackers can change the world. Qi embodies all of these values,” he adds.

Decoding Qi Lu’s Role

Qi Lu will be the chief executive officer of Y Combinator China, and will also head the incubator’s nonprofit research lab. He will work from both China and the US.

“Qi will be able to take what makes YC work and adapt it for China. We are excited for Qi to come onboard as the founding CEO of YC China and to build a long-term local organization that will combine the best of Silicon Valley and China and create a lot of innovation,” Altman says.

The accelerator was founded in March 2005 by Paul Graham and Jessica Livingston as well as Robert Morris and Trevor Blackwell, with whom Paul had previously co-founded Viaweb, a first point-and-click internet storefront system that later became Yahoo.

As of 2017, Y Combinator has invested in 1,450 successful companies including Dropbox, Airbnb, Coinbase, Stripe, Reddit, Instacart, Twitch, Cruise Automation, Optimizely, Zenefits, Docker, DoorDash, Mixpanel, Heroku, Machine Zone, Weebly, and Paribus. The combined valuation of YC companies is over $80 billion.