Chinese familism plays an important role in the recent development of Chinese societies. Many Chinese firms are actually family based. Familism affects not only the management of Chinese firms but also the formation of new firms, as Chinese families often provide start-up capital. Because of the supply of start-up capital, parents and other family members may gain a say in the venture and its operation. Hence, family capital may carry with it liabilities and obligations. In this paper, we examined how familism would interact with market rationality to influence young Chinese entrepreneurs in their decision to seek initial capital.