Global Themes

On Globalization & Venture Capital

Live Blogging at Red Herring Asia 2006

rhs_logo_1.gif Hong Kong, 29th Aug:
Arrived bleary-eyed this morning from London and then straight to the Conference venue…not disappointed. Good agenda, a number of exciting companies and some good panel discussions.

*****

Some observations from the company presentations:  

  • PowerPoint is the bane of our times…and sadly there is a woeful lack of coaching on making good presentations. Way too much content on some slides and pitches. I recommend everyone reads Guy Kawasaki’s “The 10/20/30 Rule of PowerPoint”. (Note to myself: re-read it)
  • Had a flash-back of the pre-bubble days during one of the presentations…”Beta roll-out – Q3 ’07; IPO – end of ’07”…I am not making this up. 
  • Noticed that a lot of companies were not really about fundamental innovation or disruption but were aiming to create value by innovation in process(es) or dis-intermediating complex delivery channels – nothing wrong with that…the markets that are being addressed in these business models are so large and fast-growing that enormous value will be generated even though there is no “text-book” innovation happening. Case in point: Focus Media; Also see one of my earlier posts on this: “Globalization = Copying a Successful Business Model?”
  • Startling statistic (at least to me): 77m broadband subscribers in China (60% of online population) and still only 8% penetrated.

*****
29th Aug – Afternoon Keynote Session : Insights from Global Venture Capital:

  • In his opening remarks, Alex Vieux talked about how the venture capital model had fundamentally changed from the time when venture capital was synonymous with Silicon Valley
  • Until the late 90s, Asia was a “forgotten” land and the only brave soul to venture into these uncharted waters was Lip-Bu Tan, the legendary founder of Walden International (“most people thought he was crazy or wanted an excuse to visit his mother in Singapore” – Alex) 

Lip-Bu had some great words of advice for start-ups and entrepreneurs, distilled from his 22 years of experience in venture capital and building companies:

  • Aim to be a “category killer” – lower price and better performance almost never fails
  • The most important criteria (this one for VCs) in deciding to invest in a start-up should be (NOT “Management” but) the (size of) “Market”; Lip-Bu credited Donald Valentine of Sequoia for this learning
  • Go for the “big collaborations” – i.e. partner with the Goliaths of your industry – the IBMs, the Microsofts, the Samsungs
  • Have a Small board- too many VCs will invariably lead to failures.

Paula Beroza from Sierra Asia Partners (not to be confused with Sierra Ventures) presented some slides on the Asian Venture Capital industry. Her summary slide captured the essence:

  • Human Resource will be a constraint to growth of the industry (Not enough people with investing experience on the ground)
  • It will become increasingly difficult for VCs and fund managers in Asia distinguish themselves (“Capital is not a distinguishing factor anymore – everyone has money”)

Claudia Fan Munce mentioned how – in a twist of fate – she came to be heading the division within IBM focused on external partners. Her 16 years at IBM prior to this were spent in the research labs, defending the “NIH” culture within IBM.

Claudia is now a Founder Managing Director of IBM Venture Capital Group and the only Vice President at IBM to be based outside HQ (she works out of San Jose).
She mentioned that IBM “vets” VCs on 24 (yes, twenty four) different criteria to consider whether they would make good partners.
 

Thought for the day (from Alex)
Any term sheet that takes more than 10 minutes to understand, don’t take it…!

August 29th, 2006 Posted by | Venture Capital in Asia | no comments

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