Sandhill Road VCs Face Great Wall Hurdles
Filed in archive VC and PE: education and training by james on October 10, 2005
Xue goes on to indentify specific reasons why most Silicon Valley VCs are still misguided and often misinformed in their attempted China due diligence:
Kanbujian. VCs simply don't see the deals because they are difficult to find.
Kanbuqi. VCs don't take the deals seriously because they are often too small.
Kanbudong. Foreign VCs fail to understand the deals because they (the deals) are too Chinese.
As is often the typical American or rather Silicon Valley approach, the VC jets into the Middle Kingdom mid-week and expects to be flooded with deals before the end of the week. Additionally, the investors dismiss small tech deals because they cannot justify the extraordinary attorney fees.
The final excuse for not investing in Chinese tech companies is simply fear. Sandhill Road, home to the largest concentration of VCs don't understand the language, culture and ultimately the level or role played by government influence.
In the Red Herring article, WI Harper's David Zhang has this advice for Western-based venture capitalists who want to invest in China: "If you want to make money in China, you cannot take the short-term, fly-by Commando
approach and try to manage remotely. If you do, you will get burned and lose your money."Permalink: Sandhill Road VCs Face Great Wall Hurdles
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