Tag Archives: China

The Power Law and Venture Capital (part 4), China’s rise

In the part 1 of my post about The Power Law, I had embedded my own visual history of venture capital. There was a missing element which is China’s rise, that Mallaby adresses in his 27-page Chapter 10. Before 2010, venture capital in China was behind Europe, but today it’s challenging the USA:

Source: Mallaby’s The Power Law, appendix, page 413.

Mallaby convincingly explains that it developed not with the support of, but bypassing the Chinese government and surprisingly thanks to a combination US venture capitalists and Chinese people who had been in close contact to the American entrepreneurial culture. I knew nobody from the people below but one entrepreneur (you can check their names at the end of the post).

I had heard about the BATX which are nowadays compared to the GAFA and I loved Jack Ma’s video which could have been given by many Silicon Valley entrepreneurs. Here it is again:

I had a few Chinese startups in my 800+ cap tables and they are mostly internet and ecommerce companies. Mallaby seems to have similar views. I extracted them all (see below) and here are a few interesting characteristics:

Not only are they mostly internet/ecommerce companies, but they are recent, went public quickly, their founders are younger than average, keep more equity than others, and they have many more founding CEOs than the average. Interesting…

Equity List China

In the image above are the:
Funders: Gary Rieschel (Qiming), Neil Shen (Sequoia China), JP Gan, Hans Tung (ex-Qiming), Kathy Xu (Capital Today), Syaru Shirley Lin (ex-Goldman Sachs)
Founders: Jack Ma, Richard Liu, Wang Xing

The largest technology companies in the last 10 years in China and in Biotech (Part 2)

Following my recent post, The largest technology companies in Europe and the USA in the last 10 years, I needed to add a quick follow-on which comes from the fact that many people asked me two additional questions:
– but what about China?
– but what about biotech?
I am not a specialist of either dimension but I tried to do a similar exercice in the past and yesterday. Here are the results:

Top China 2020

Top China 2016

Top Biotech 2020

Top Biotech 2016

Top Biotech 2007

I have a small doubt about the year of that last table (best effort only…) and all the data in a single pdf here: Top China and Biotech

Also a short synthesis to be compared with the previous post:

The Dark Side of Innovation

If you read the Englsih version of my blog, you probably do not know the excellent, brilliant Philippe Meyer and his Chronicles on France Culture. He is usually funny, but when he talked last Friday about innovation (which does not happen often), it was tough to smile. You can listen to his mp3 file here.

Philippe Meyer is in fact refering to an article from the New York Times: How the U.S. Lost Out on iPhone Work. Meyer mentions the famous Titan Diner, where President Obama invited some of the Silicon Valley personalities. He talks about the price we pay to have our electronic gadgets, the price paid by the Chinese workers at Foxconn or by the American middle-class and its high level of unemployment.

I do not have any (good) answer to the question. But it is sometimes good to think about the dark side of innovation and economy in general. I am currently reading a biography of Schumpeter. Already, more than a hundred years ago, the problem was addressed by Keynes, Marx and the free-market economists. Have we make any progress? Is the situation worse?

Andy Grove had the same concern in 2010 when he wrote How America Can Create Jobs for Business Week. The Americans are nationalistic, Intel was known to produce almost exclusively in the USA and now Grove is worried. Again I do not have an answer.

The New Silicon Valley(s)

Nice series on French-speaking Swiss Radio broadcast les Temps Modernes, this week about five stimulating experiments of high-tech clusters. Probably to fight the depressing mood around WEF and the economic crisis. (And not only because I was given the opportunity this morning to comment the last case! I was only invited on Wednesday… 🙂 )

Monday it was about Russia’s Skolkovo, which I had mentioned in a post a few months ago.

I did not know at all Kenya’s Konza, and this was really refreshing.

You cannot avoid China, but here also surprise, surprise, it was not Shanghai neither Shenzhen, but Zhongguancun.

I had heard of Startup Chile, because Stanford supports the experiment in South America.

Finally, I could comment the stimulating British case, the Silicon Roundabout, in East London. You can listen to or download the mp3 file (in French).

A spontaneous emerging cluster, a name given by a local entrepreneur, no real support by decision makers, at least in the beginning and a nice and enthusiastic atmosphere. And all this attracts people from abroad. Is this finally the cluster Europe has been waiting for? We shall see… The experiment is really interesting and if you want to know more, you may wish to read (French) Le Monde, Le “Silicon Roundabout”, un succès britannique, or The Economist, Silicon Roundabout.

Going public when you are not a US start-up – part 4/4: Baidu

Baidu ends my small series of non-US start-ups. What is interesting is that there are some anecdotal differences. At least for the European ones, it was not an easy adventure with many tough financing rounds. Alibaba was not totally clear. Now Baidu…

As a first word of conclusion, the value creation of the two Asian companies is much larger than the European ones. It might be linked to the fields (Transmode and Envivio are more in the high-tech infrastructure, where as the two Chinese companies are internet services). It might also be the perception of different dynamics in both continents…

Baidu was founded by two Chinese citizens, Robin Yanhong Li and Eric Yong Xu. Li “went to SUNY-Buffalo in the US to study computer science towards a Doctoral degree. He received his Master of Science degree in 1994 after he had decided to discontinue his PhD program work” (Wikipedia). Xu “received his Ph.D. degree from Texas A&M University, post-doctorate from University of California at Berkeley, and his B.S. and M.S. degrees in Biology from Beijing University. Dr. Xu was also a candidate of the Stanford University Sloan Masters program”. (Bio on Bioveda Fund website).

Baidu is quoted on Nasdaq. Is there a link between the background of the founders and/or the fact they have investors such as Draper, IDG and Google? (Remember that Alibaba has Yahoo as a major shareholder – even if the relationship was quite tensed recently).

PS: I may come with a fifth story soon, an Indian startup quoted on Nasdaq I read about just yesterday…

Going public when you are not a US start-up – part 3/4: Alibaba

I leave Europe with two recent filings (Envivio, Transmode) to China. There would be much to say about China, my recent post on venture capital shows the growing role played by the country in high-tech. At the same time, I don’t know many Chinese success stories, with the exception of Alibaba and Baidu.

I should add Foxconn, the famous computer company which produces Dell and Apple machines, but I have not much about it. Alibaba was founded in 1999 and went public on the Hong Kong stock exchange in 2007, even if its major shareholders are Yahoo and Softbank.

It was tough to build the capitalization at table. There is about 30% of the company shares which I could not link to individual or institutional stockholders. It could be linked to that fact that the Chinese entitity owns these shares. I cannot avoid adding that just like in Europe, the filings of non-US companies are sometimes more cryptic than for American companies. But it might be just because I did not spend enough time on the documents. It might be also that I made a confusion between the quoted company and the mother company which is not quoted (check this 2009 newsrelease that I discovered while writing the post!)

What else? The founders have similar ownership to US start-ups. Another thing which puzzles me is the fact that Alibaba is not quoted on Nasdaq or NYSE and that in parallel, some major stockholders are from the western world… But the founding team has strong chinese roots which balances the overall picture.

Next: I will compare the situtation with Baidu, the other Chinese success story I studied.