Tech innovation and venture investment with a Silicon Valley view of global trends
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. http://www.bvp.com/Team/Default.aspx?m=1
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, http://www.amazon.com/Silicon-Dragon-China-Winning-Tech/dp/0071494472
The short story is that investors lost $10 million on that one deal alone.
Another Chinese portfolio company, education company Chinaedu.com, 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.
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. http://www.bvp.com/Team/Default.aspx?m=1
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, http://www.amazon.com/Silicon-Dragon-China-Winning-Tech/dp/0071494472
The short story is that investors lost $10 million on that one deal alone.
Another Chinese portfolio company, education company Chinaedu.com, 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.
Thursday, January 29, 2009
Doing Business in China series
If you're looking for a guide to doing business in China, let me recommend this DVD series narrated by the Atlantic's James Fallows with analysis by the New York Times' Joe Nocera. Writing about the series, Fallows praised it for showing the inside of China -- people, places, factories. See http://jamesfallows.theatlantic.com/
The project was spearheaded by video journalist Bob Shapiro, who with his crew worked years to get some 150 interviews with government officials, factory workers, tech entrepreneurs and more.
The series, called "On the Frontlines: Doing Business in China," contains five DVDs and an information-packed CD-ROM. Here's the website that previews the package: http://www.chinadoingbusiness.com/. For the trailers, click here: http://www.chinadoingbusiness.com/doing_business_china_previews.htm
I'm taking time to highlight the series partly because it's an excellent briefing on China today, and also for a bit of promotion. My book, "Silicon Dragon-How China is Winning the Tech Race,"
http://www.amazon.com/Silicon-Dragon-China-Winning-Tech/dp/0071494472 is featured in the series. I think the producers chose my book because it too gives an insider's look at China, in this case its rise as a technology innovator, seen through the eyes of its leading entrepreneurs.
The project was spearheaded by video journalist Bob Shapiro, who with his crew worked years to get some 150 interviews with government officials, factory workers, tech entrepreneurs and more.
The series, called "On the Frontlines: Doing Business in China," contains five DVDs and an information-packed CD-ROM. Here's the website that previews the package: http://www.chinadoingbusiness.com/. For the trailers, click here: http://www.chinadoingbusiness.com/doing_business_china_previews.htm
I'm taking time to highlight the series partly because it's an excellent briefing on China today, and also for a bit of promotion. My book, "Silicon Dragon-How China is Winning the Tech Race,"
http://www.amazon.com/Silicon-Dragon-China-Winning-Tech/dp/0071494472 is featured in the series. I think the producers chose my book because it too gives an insider's look at China, in this case its rise as a technology innovator, seen through the eyes of its leading entrepreneurs.
Tuesday, January 27, 2009
Sequoia Capital China partner is out the door
Several of my closest sources are telling me some big news on the China venture investing front. They say with the greatest confidence that Fan Zhang, one of the co-founders of Sequoia Capital's China outpost, is leaving the firm.
Now, Fan is not responding to my requests for an interview, so I can't confirm this news for sure.
But I believe it is true. UPDATE: And it IS true. See http://www.reuters.com/article/newIssuesNews/idUSHKG27937920090202
This comes after private equity firm Carlyle filed a suit against Fan's partner in China, Neil Shen, allegeing that Shen effectively stole a deal right out from under them. Maybe Fan did not like to be so high profile in that way.
Anyhow, what's significant about this is that Silicon Valley venture capitalists are struggling to hold their teams together in China. Sequoia is not the first prestigious player to lose a master deal maker. Kleiner Perkins did too, when former partner Joe Zhou walked from the firm to form his own fund.
I am sure that Fan will do well whatever he decides to do next. He is one of the biggest advocates of China's ability to innovate on the technology front. See my video interview with him here, http://http//www.youtube.com/watch?v=tBiydUSqRFE
Fan was a key early investor in search engine Baidu -- the Google of China. He has plenty of new deals in his portfolio that could reach similar heights.
The above photo was taken at CCTV's studio in Beijing, where Fan and I were interviewed for a half-hour show by host Tien Wei on her show Dialogue.
Thursday, January 1, 2009
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