Friday, January 30, 2009

Closing Business in China: Bessemer

No one said it was going to be easy. And making investment deals in China has not been without pain for U.S. venture capital shops. The latest venture firm to close up shop in the Mainland is Bessemer Venture Partners.
This isn't news that Bessemer is blasting out in press releases. Rather, any mention of China is now buried on the Bessemer web site, with just a listing remaining for senior associate Jing Wu.
She needs a new job, by the way, and seems to have some sterling qualifications.
I first met the head of Bessemer's China practice, Li Gong, over coffee at Il Fornio in Burlingame. He told me how he was going to set up the firm's office in Beijing to do early-stage deals in China --the same formula the shop uses in California and Massachusetts. Certainly, he had the resume for it--top management posts at Sun Microsystems and MSN Technologies, a PhD from the University of Cambridge and co-author of three books. At the time we met two years ago, he was running Mozilla Online in Beijing and about to launch Bessemer in China.
Now, he's returned to that post at Mozilla, leaving Ron Elwell in Boston to wind down operations. Li blamed the collapse of former portfolio company Bokee as a major reason for the exodus. The Bokee saga is well documented in Silicon Dragon,
The short story is that investors lost $10 million on that one deal alone.
Another Chinese portfolio company, education company, went public on NASDAQ in December 2007 but the stock hasn't been performing well since then. One other China deal,
FG Wireless, a design house for 3-G mobile phones, remains in the portfolio.
I know Bessemer won't be the only U.S. venture shop heading home. This year is all about who has the best survival skills in the highly challenging investment environment in China today.
It takes a lot of on-the-ground street smarts, for starters--not something easily managed from Boston or Sand Hill Road.