Funding proves major problem for startups

His plan is to launch an app delivery service for parcels and goods. So far, he has yet to tempt, or even meet, a single investor into funding his startup.

"One of the problems is that I don't have a social network in Beijing," Xiang, who hopes to raise 1 million yuan, said. "It is next to impossible to entice venture capitalists with just an idea. Now, I'm racing against time to develop my product first."

Rapidly running out of money, he has spent the past few months in the Cheku Cafe, an entrepreneurship-themed coffee house in the Haidian district of Beijing.

Xiang pays 25 yuan for a Latte coffee and works on his keyboard for the rest of the day. In order to keep his expenses down to the bare minimum, he pays 600 yuan a month to share a university dormitory.

"But I don't think life is tough, because I am creating value ... It's better than working for other people," he said.

Even if Xiang does manage to tempt an investor with his idea, there is no guarantee he will end up with funding. Promises in the entrepreneurial business are often made and then broken.

Liu Lei, co-founder of Hehe Yunying, an app where Internet experts offer professional advice, suffered a similar fate. "Our company has had problems in that direction," Liu, 26, said.

"After being in discussions for a month, the investors knew almost everything about our team and promised to plow money into our project. But suddenly they took a stake in a rival company. It was a huge waste of time and resources."

Ma Si contributed to this story.