Gaule: Can you give us a brief description of your fund?
Chen: iD TechVentures (www.idtvc.com) was formerly known as Acer Technology Ventures until 2005 and is a leading early-stage venture investor in greater China. A decade after starting, iDT has offices in Shanghai, Beijing and Taipei, managing four funds with an aggregate $400m (€327m). IDT VC invests in information technology, clean-tech and consumer and over the past 10 years we have listed three companies on the Nasdaq stock exchange and more than 19 other initial public offerings
and merger and acquisition exits.
Gaule: What has been your most interesting recent deal?
Chen: An LED lighting application deal about to close. The deal is following the trend for clean-tech applications, in which China is a centre for growth. The market here in China is, however, developing differently from Europe and the US as local companies are not upstream or focused on commercial applications but looking at downstream applications.
Gaule: What are the opportunities for investments and fundraising?
Chen: The venture capital market in China is developing as it is at an interim stage. The proportion of VC funds under management to China’s gross domestic product is 0.1% to 0.2% against 0.5% to 0.6% in more mature markets. There is going to be good growth in the future on the back of China’s economic growth, which is expected to be more than 8% this year.
And while limited partners are showing some concern about the potential for investment opportunities in the US, China is the market they are showing keen interest in and they are ready to make investments here. The development of local currency, onshore investment funds over the past two to three years has been interesting as for the past 15 years offshore investment funds have been the way of doing things in China. Local funds is a trend to watch but investors will need to take care of its potential conflicts of interests with overseas funds as the same manager could have RMB and dollar funds with different limited partners in the same deal.
Gaule: A number of my corporate venturing members are now considering entering the Chinese market. What advice would you give?
Chen: Foreign investors need to look at China as different from their local markets in terms of technology dealflow. There is not much genuine innovation. Instead there is more on applications and localisation, or adopting foreign technology for Chinese use. The deal structure can also be very different and it has tended to be via a registered Cayman company. The change in RMB funds will also change the approaches. It would be recommended to identify good local partners to co-invest with, as business practices are different.
Gaule: What do you do to relax when you are not dealmaking?
Chen: I spend 40% of my time travelling away from my wife, who is based with me in Beijing. My father is in Taiwan, so I go back to see him every quarter. I also have a passion for supporting young people through the Yanxing China project, a charity project backed by the VC community to support college students in Beijing. I have been behind the project for the past seven years (v.youku. com/v_show/id_XNTQ5OTE5MTY=.html)
The full, 15-minute interview is available to listen to at www.globalcorporateventuring.com
To contact Andrew Gaule and for future interview ideas email andrew.gaule@h-i.com and jmawson@globalcorporateventuring.com