InnoSpace, a Shanghai-headquartered incubator, is gearing up to build a new laboratory for startups in the New Retail sector. It is raising an investment fund in a bid to better serve entrepreneurs.

Founded in 2011, InnoSpace is a one-stop solution platform for startups, consisting of physical spaces and digital network of services.

Entrepreneurs can have their innovative ideas incubated there, secure a workplace at a reduced price and have access to laboratories for innovation. High-quality projects also have the chance to get funded by InnoSpace.

"The combination of all these key elements aims to satisfy the demands of the entrepreneurs in all areas ranging from their work, communication and life," said Richard Tan, chief executive of Inno-Space. "Entrepreneurs can get almost whatever they need in this community."

According to Tan, Inno-Space has served more than 400 companies since its establishment. It is now a member of the "National Innovation Alliance" recognized by the Ministry of Science and Technology.

Late July, InnoSpace launched a New Retail laboratory called RetailTech Lab in Shanghai. It enjoys rich resources both from its parent Shui On Group, a real estate company, and Li & Fung Ltd, a leading global supply chain solutions partner for consumer brands and retailers.

New Retail merges online and offline channels by leveraging internet technologies in order to boost sales.

Allan Zhang, executive director of Shui On Land, said: "Making full use of our respective advantages, the lab will create fresh opportunities for companies in New Retail and new logistics industry.

"What the entrepreneurs need nowadays are not just space and capital but also vertical market expertise. They want to have a chance to verify whether their business models hold water or not. This is our understanding of startups' second-tier demand."

Chang Ka Mun, managing director of Li & Fung Development (China) Ltd and Fung Business Intelligence, said its parent company Fung Group has gained rich capabilities over the course of its centurylong history in trading, logistics, distribution and retail, which can give solid support to startups that are exploring related fields.

"Explorium, the group's value-generating ecosystem for commercial enterprises, for example, can offer application scenarios for startups in the New Retail lab and help them test and validate new ideas," Chang said.

Another strategic priority of InnoSpace is to raise 150 million yuan ($22 million) to 200 million yuan for its new investment fund by the end of the year. It will be used to support startups with high potential mainly in three targeted sectors: intelligent manufacturing, automobile, New Retail and supply chain.

What is fueling the expansion of InnoSpace is China's steadfast commitment to fostering innovative ideas and entrepreneurial spirit.

In 2014, the government proposed mass entrepreneurship and innovation, which has been viewed as a new engine for China's economic growth.

As startups mushroomed over the past years, the number of incubators and accelerators grew rapidly in China.

By the end of 2015, China had 2,530 incubators targeting technology companies, one of the largest among all countries, according to a report by Zero2IPO Group, a financial service provider.

Guo Fang, a researcher at Hi-Tech Startup Service Center in Gansu province, said the operating model of incubators is gradually evolving to meet the evolving demand of startups.

"Traditional incubators offer office space, general business assistance and management training courses. While nowadays they have more and more functions including venture capital, strategic guidance and network resources," Guo wrote in a research note.

"As the market has a glut of incubators, some small-scale ones are expected to get phased out in the future. Those who have industry expertise and the abilities to foster startups gaining market validation will spring up," Guo wrote.