| 作者 |
 VC系列：China Venture Capital Forum (CVCF) Silicon Valley -（转帖） |
 |
安普若
[博客]
[个人文集]
头衔: 海归元勋
声望: 大师
性别: 
加入时间: 2004/02/21
文章: 26038
来自: 中国美国的飞机上
海归分: 4196257
|
|
|
作者：安普若 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
China Venture Capital Forum (CVCF) Silicon Valley - Behind the Scenes of 2007 China VC
By elliottng
Posted in China Economy, Elliott Ng
A few weeks back on May 6, I briefly attended two sessions of Zero2IPO’s China Venture Capital & Private Equity Forum (CVCF). I wrote this post up but then the Sichuan earthquake happened and I was focused on that.
I only had time to attend two sessions that day. Here are my notes and key takeaways from first of the two panels I attended.
Session 1: Venture Capital - Behind the Scenes of 2007 China VC Industry & Projections for 2008
Elliott’s key takeaways:
* There are diverse investing styles among China VCs. Some like innovative, technology-driven deals targeting global markets. Others like execution plays targeted toward fast-growing domestic markets.
* The consensus is that early-stage has the least competition, with growth and mezzanine stage seeing high degrees of deal competition.
* Sectors that seem to be hot include: clean tech, health care, consumer products, consumer services. This is in addition to the traditional VC sectors of semiconductors, computer hardware, software, internet, and media.
* There is increasing regulatory pressure on traditional company structures like the “Sina model” and increasing barriers to foreign direct investment. An alternative joint venture structure is preferred by regulatory agencies like MOFCOM but are more onerous to set up.
* RMB funds are emerging as a new factor. They can be used to invest in new sectors, potentially in partnership with municipal governments. There are significant challenges in making this fund structure work with foreign Limited Partners.
* RMB funds also face challenge from a domestic investing environment where there is a lot of Chinese domestic money that is less demanding from a rights and preferences basis.
* The market feels a little “frothy” as there are lots of first time entrepreneurs and first time VCs. The legal and accounting support for these deals is also in scarce supply, forcing VCs to do more of the deal work themselves.
Panelists:
* Danny Lui, moderator. Zero2IPO Group, Vice Chairman Startup Capital Ventures, General Partner
* Yan Huang. CDH Ventures, General Partner
* Gary Rieschel. Qiming Venture Partners, Managing Director
* Alan Song. SoftBank China Venture Capital, Managing Partner
* Lip-Bu Tan. Walden International, Founder & Chairman
* Yang Xia. Legend Capital, Managing Director
* Joe Zhou. Venture Capitalist
Question: In 2007, how many deals have you done? How much money has gone in?
Yan Huang, CDH Ventures
We’ve invested $200 mm in 18 companies; 1/3 early, 1/3 mid stage, 1/3 inflection point. We invest in clean tech, medical device, internet, education. We focus on growth rate, not initial profitability.
Gary Rieschel, Qiming Venture Partners
We’ve made 14 investments; 10 are pre-revenue. We led 12 deals, and invested $100 mm. We are focused on early stage, where many investors are not comfortable investing.
Alan Song, SoftBank China Venture Capital
We invested in 12 companies, $75 mm. Our fund size is relatively small. Our first fund was $100 mm, our second fund was $200 mm, and today our 3rd fund is a $300 mm fund. We are still focused on early and middle stages. We are opportunistic with late stage deals, where late stage is defined as pre-IPO in China H Shares (Hong Kong stock exchange IPO)
Lip-Bu Tan, Walden International
Walden international is 40% in China, investing in 4-6 companies/year. Our focus is very early stage with 70% investment, and expansion stage with 30% of our investments. We are interested in clean tech, and often traditional businesses like a brick manufacturing machinery company we invested in.
Yang Xia, Legend Capital
We’ve invested in 16 deals, and deployed about $60 mm. We are mostly invested in early stage investments, but in three deals we invested in growth capital. We invest in information technology, design, wireless services, CRO outsourcing
Joe Zhou, raising a fund
I’m interested in clean tech, technology-driven fields like semiconductors, media, advertising, and consumer service.
Q: What industry do you like best in CN? How much money is needed for startup to get to liquidity? How much time is required to get to liquidity? What multiples are you looking for?
Yan Huang
We like clean-tech and alternative energy. An example is the solar sector. This is not a typical VC investment because it is investment-intensive and manufacturing intensive. For example, one firm we invested in, LDK, raised $100 million in six months, and went from zero to IPO in 2 years. Returns, management required, and capital needed is not typical. In this case, we got a 5X return on our investment in nine months.
Gary Rieschel
We don’t look at specific industry sectors, but at technology innovation. We’ve done study tours of: synthetic biology, pharmaceutical, clean tech. There is still very limited innovation base in China. We’re interested in healthcare, such as clinical trial outsourcing, and we’ve made four investments to date in health care. It can require anywhere from $2 mm to 40 mm in capital to get to profitability, depending on the deal. We have the most sector experience to date in healthcare.
Alan Song
We like recession proof industries. With a 550 mm urban population in China, industries like food and beverage and packaging material are interesting, and trade at 30 price-earnings ratios. A deal might require $20 million and 3-4 years to reach IPO, and our return expectations on deals are 10X.
Yang Xia
We like IC chip design/build opportunities. These deals generally require 3 rounds of capital to get from product to business success. They often take 6 years or more. there are lots of plays up and down the value chain in computing and IT.
Joe Zhou:
I don’t like hot sectors. However, we have been looking at clean-technology, semiconductor, media/advertisement, and the consumer service/direct marketing space. We’ve made three investments that went IPO. Respectively, we invested $40mm, $40mm, and $20mm, and achieved IPO valuations of $800mm, $500mm, and $250mm on that investment.
Q: RMB funds are starting to emerge. These funds allow you to make pure RMB investments into a joint venture with a local company, that then allows you to go public on China stock exchanges. What is the opportunity for these funds?
[caveat: I don’t fully understand the regulatory issues affecting RMB and foreign funds and the companies that can accept funds from RMB or from foreign funds, so these notes may not make complete sense]
Alan Song
The emergence of RMB funds is in part due to government pressure against the prevailing company structures that have been used by venture backed companies. There are two models, one called the “Rev Trip Model” (Elliott: not sure I have this correct) and the other called the “Sina model.” In the Sina model, a British Virgin Island (BVI) or Cayman Islands holding company is established, into which foreign investors invest funds. Then a Wholly Foreign Owned Enterprise (WFOE) is established in China. That WFOE then contracts with a domestic company owned by a Chinese national. The contracts between the WFOE and domestic company insure that the assets of the domestic company (such as the ICP license) are controlled by the WFOE. Officially, this structure is not allowed by MOFCOM (Ministry of Commerce). They are not supporting this and discouraging the use of this structure.
MOFCOM wants to push the use of Joint Ventures, but there are other issues with that structure. Investors receive the same stock with the same rights, and there are no priority rights that can be offered. So in a venture-backed joint venture structure, the company has another set of agreements that enforces the preferences for the investor. (Elliott: in Western venture deals, investors receive a preferred class of stock that offers certain preferences like liquidation preference, class vote on certain issues, board directors representing the class, etc.)
RMB funds are difficult to set up. Softbank was one of the first foreign VCs to create a joint venture-foreign RMB fund. But approval from multiple regulators is needed: MOFCOM, SAIC (State Adminstration for Industry and Commerce), SAFE (State Administration for Foreign Exchange), and SAST (Elliott: not sure I have this correct: State Administration of Science and Technology). But once the RMB fund is set up, then there is no case by case approval for deals. There is also a tax advantage to the structure, by setting up a “non legal person entity” which acts like a limited partnership, we only need to pay a 10% withholding when funds are … (Elliott: didn’t catch this)
In summary, RMB funds are: hard to set up, but then much easier to invest.
Joe Zhou
There are two problems with RMB funds. As a General Partner, I need to raise funds from RMB sources but it doesn’t fit with current Limited Partner base. If I take care of LP base, then there is a lengthy process of approval for the fund. (Elliott: I think this means that there is a way to set up an RMB fund that receives foreign investment, but the approval process is more onerous, both on the fund setup and also on individual investments? RMB funds that strictly receive domestic investment are more easily approved, not sure.) With foreign LPs, we need to get approval at the point of the investment and then you do capital call from foreign LPs.
RMB funds are a totally different game, because you are competing with local funds for investment. There are different capital market dynamics. For example, we invested in Unipay. There was a different investor base, they didn’t demand any rights and preferences, and those local investors were so much less demanding that we couldn’t ask for what we usually do and still be competitive.
I am going to continue to target technology plays that will list in offshore markets.
Danny Lui
Yes, there seems to be so much local money not looking for much return!
Yan Huang
The RMB funds invest into local Joint Ventures. This creates an opportunity to invest in some different sectors. We can work with municipal governments to let them into the fund as special limited partners into the core fund. Then, we can make RMB investments that can go into foreign-prohibited sectors, with the support of these municipal governments.
Question: What do you think about the overall state of VC and the model?
Joe Zhou
The next two years is the best time for investment in the sectors that we are focusing on. Not worried about market. We are moving from 80x to 50x … (Elliott: did not catch what…price-earnings ratio?)
Yang Xia
There is more money coming in and lots of Chinese money. More people are educating entrepreneurs on how to raise money. There is limited bank capital, so entrepreneurs must seek venture capital. I feel valuations are going up, as “more hunters are in the market.” There is too much money, the market is hot, and deal access is the issue. Early stage deals are more stable, but growth stage deals are crowded.
Lip-Bu Tan
The change in Taiwan and Mainland China’s relationship is creating an opportunity. Big investments from Taiwan companies are investing in China, and there are cross border opportunities. There is lots of competition, and still disjointed valuations between public markets, US venture markets, and China venture markets.
Gary Rieschel
I went through Japan from 1988-1993, and Silicon Valley from 1993-2004. What makes me nervous is that I am seeing lots of first time entrepreneurs, and first time VCs, and Limited Partners interested in going to China. In 1996, the Kleiner Perkins (KPCB) $300 million fund was the largest ever raised. Also, in Silicon Valley, the accounting and legal infrastructure is in place. Banking infrastructure is also in place. But in China, there is less capacity, so VCs need to be prepared to do more of the work. Quote: “You think its competitive in SV? Bull—. In CN, you should see what entrepreneurs do to each other.” There are also lots of challenges. For example, we were involved in “rollup from hell” wher we took four companies in clean tech from four areas with municipal government involvement and needed to negotiate a deal that made sense for all four founders and their four local government sponsors.
Yan Huang
The challenges are obvious. First, finding quality companies at a cheap price. Second, we need to work much harder - need to be lawyers, accountants, etc. and put more time into the deals. The consumer sector is strong. We invested in a soybean milk maker, a traditional industry that is growing 70%/year. Foreign direct investment is also geting worse because of RMB appreciation and hot money.
Gary Rieschel
There is no reasons why FDI would be relaxed.
Summary:
Venture capital in the US follows more clearly defined sectors–high growth, high market multiple opportunities driven by new markets and new technology. Venture capital in China is much more diverse, as the entire economy is high growth, and many sectors that are mature in the US are still at an early stage in China. As a result, there is a lot more diversity in fund strategy in China and the need to excel at pursuing that fund strategy.
https://cnreviews.com/elliott_ng/china_venture_capital_forum_cvcf_silicon_valley_-_behind_the_scenes_of_2007_china_vc_20080529.html
作者：安普若 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
|
|
|
| 返回顶端 |
|
 |
|
-
 VC系列：China Venture Capital Forum (CVCF) Silicon Valley -（转帖） -- 安普若 - (13637 Byte) 2008-6-08 周日, 09:43 (7924 reads)
|
|
|
|
您不能在本论坛发表新主题, 不能回复主题, 不能编辑自己的文章, 不能删除自己的文章, 不能发表投票, 您 不可以 发表活动帖子在本论坛, 不能添加附件不能下载文件, |
|
|
