Global Currents: Asian opportunities bloom
By Rebecca Fannin
Red Herring, February 13, 2001
Will a Silicon Valley model work in Asia? It's not an easy question. For an answer, I dropped by the Asian Technology Venture Forum, held last week in San Francisco.
If you looked at the size of the audience (45, tops), you'd wonder if Silicon Valley-type execs have much interest in Asia. But if you stuck out the conference for more than a few hours, you might be swayed by the passion of its attendees, many of whom haven't been simply observing from a safe distance in the Valley but are out there taking risks.
What a lot of America-centric execs don't get is how distinct the countries of Asia are from one another. You can't simply look at all of Asia and come up with a conclusion. It depends on many factors. But the panelists here -- some of the heavy-hitters of the Asia venture scene -- understood that.
Lip-Bu Tan, who helped to introduce the venture capital business in Asia in the mid-1980s as founder of Walden International, spoke of why anyone would bother investing in Asia. Despite the challenges of recruiting top management, dealing with cultural differences, and regulations, he argued the U.S. slowdown makes for a good time to explore Asia (Walden recently added two new investment pros to assess bioscience and commerce opportunities). In Asia, you'll find potential in the Internet, e-commerce, and third-generation (3G) telecom. Where to focus? China, India, and Japan, Mr. Tan says.
But really, how much potential is there? Joel Kellman, a Silicon Valley lawyer turned venture capitalist, asked some tough questions. How many high-tech startups in China will have market caps of $1 billion in five years and not just spike momentarily? Maybe only between 20 and 30 companies, replied Hong Chen, a person who should know. He was among the first group of mainland Chinese CEOs to start a high-tech company -- GRIC Communications (Nasdaq: GRIC) -- in Silicon Valley and bring it to IPO on Nasdaq. Mr. Kellman asked, what about in ten years? Well, that's a much different story -- maybe as many as 100 will have stood the test of time. "That's my bet too," quickly added Mr. Kellman, who is banking on those numbers. He recently raised a $100 million fund called Granite Global Ventures that will invest about one-third of its pool in Greater China.
A FEAST OF OPPORTUNITY
The eyes of Eric Li, whose one-year-old Chengwei Ventures invests in mainland Chinese startups, lit up as he described four of his company's own deals. It was easy to see where he was coming from as he started off his presentation by proclaiming: "Being a venture capitalist today in China is complete and utter ecstasy. There is nothing better to do. My partners and I love our work."
While Mr. Li acknowledged that exit strategies from investments are pretty much limited to sales to strategic partners right now, he talked of how China is moving toward a knowledge-based economy and of technology's role in transforming the country. "It's hard to top the great business instincts of the Chinese entrepreneur," he says. Where does he look for entrepreneurs to back? Among a group of overseas Chinese who had led highly technical careers in Silicon Valley and have returned home to make their fortunes. They're apparently not too hard to find. "You'd be hard-pressed to find someone under 40 who doesn't want to start his own company in China," Mr. Li says. |
