A coffee shop in Zhongguancun is more a center for business startups than somewhere to take a break and have a cuppa. Wang Kaihao, Zhang Yue and Erik Nilsson report.

Garage Cafe looks like an ordinary coffee house but functions as an incubator for fledgling companies in Beijing's Zhongguancun.Entrepreneurs here build businesses with laptops at dining tables, rather than with desktops in cubicles.

"Rent" for "office space" is paid by purchasing a 20 yuan ($3) cup of coffee a day.

The brainchild of former investment company employee Su Di not only reduces startups' expenses but also increases communication among ambitious e-biz hopefuls and venture capitalists.

Investor Wang Jing, who specializes in mobile Internet, prowls Garage Cafe every Tuesday to hunt for gold.

"This cafe shortens the distance between technology and the market," Wang says.

"It's more efficient to contact startups in such a new ideas hub. I can look at 15 to 20 projects a day and find one or two to keep a close eye on."

Su says his nine financiers were enticed less by beverage sales than by Garage Cafe's potential as a business incubator.

"It's a platform for startups to exchange and grow more quickly," the 32-year-old says.

"But it's not a traditional office. We're more open. Communication is easier."

The manager is lukewarm toward customers who aren't there to work. He also books speakers from major IT companies to discuss tech trends and market experiences.

Su recalls only four teams came on the opening day.

"I was really disappointed in the first month," Su days.

"I really wondered if this business model was practical."

He took heart when an American friend told him similar operations had flourished in North America.

When Su began using his micro blog to publicize Garage Cafe, the 800-square-meter establishment started filling up.

Now, 15 teams regularly occupy Garage Cafe, 13 of which are from the IT industry.

Wang Kaiyu runs his online headhunting website there.

"The cafe is a real-life social network," says the 29-year-old, who worked at IBM and an IT consulting firm before starting his own enterprise.

"I optimize my project through sharing with others and getting feedback. I need to know many people to get enough investment, which is the primary need for a business in the establishment stage."

He has coaxed interest from more than 10 financiers who visit Garage Cafe, he says.

Su believes the reform of Zhongguancun, which will purge unregulated gray market vendors to attract more high-grade IT innovators, will bring more creativity to the area.

"Zhongguancun needs fresh ideas," he says.

"Most of them will come from startups that must fight harder to survive and are hungry for expansion."

Su says he hopes others will replicate Garage Cafe's model.

"That will create more opportunities for small enterprises and make Zhongguancun more dynamic, which is good for everyone."

Jin Jiashu, who runs his website there selling organic vegetables, says he appreciates the company of likeminded entrepreneurs.

His previous e-commerce business in Guangdong province's Shenzhen city fizzled after four years because of anemic funding. "When we look back later, perhaps our most memorable moments won't be our careers' zeniths but rather the coffee we drank together during these tough times," Jin says.