Following the successful migration of semiconductor foundries business to Taiwan, IC design houses are now flowing to Asia. As a result, the opportunities for venture capital investments in Greater China are increasing. Based on on-the-ground experience gained during the past ten years dealing with high-tech venture businesses between Silicon Valley and Asia, Jesse Chen will share his unique perspective on the changing dynamics of risks, timing, business sectors etc. for optimizing investments in the high tech industry in Greater China.

Jesse Chen is managing director of Maton Venture. Maton is a global venture with strategic investors and VC partners from the U.S., Europe, Japan, and Taiwan. Launched in October 1997, Maton now has thirty-two portfolio companies across Semiconductor, Communication, Software and other Information Technology industries. As of December 2002, three have gone public and five have been acquired. Jesse currently serves as board member for eleven companies.

Before Maton, Jesse co-founded BusLogic, Inc. in 1988 and served as CEO and president until it was acquired in 1996. BusLogic designed and marketed ASIC, Board and Software for the computer storage industry. Under Jesse's leadership, BusLogic achieved twenty-two quarters of consecutive growth and profitability, yielding BusLogic's first investor more than sixty times return of investment within six years. BusLogic is now part of IBM.

Jesse also served as chairman of the Global Monte Jade Science and Technology Association from 1998 to 2000 and served as Chairman of Monte Jade West from 1997 to 1998. Monte Jade has more than one thousand high tech corporate members throughout North America and Asia and more than fifty are public companies.

The trend for globalization of high-tech industries has gained momentum during the last few years. In particular, the Asia Pacific region has become an increasingly important market for U.S. high tech companies. What investors, both the public market and VCs, look for now are companies with revenue growth and a clear path to profit. The challenge for technology companies and investors is to define the roadmap to weather through the current downturn and build strength to grow when the market returns. The companies that will succeed are the ones that are close to the market, with the ability to produce their products at a reduced cost.

China, with its mass population, is undeniably an enormous market. It not only presents a broad customer base for the high-tech industry, but also an attractive low-cost manufacturing center. There is no doubt that Greater China is a lucrative region to ride the next wave of high-tech industry growth. We all want to capture this golden opportunity. How do we address this huge consumer market? How do we fully utilize the emerging labor support to lower production costs? For venture capitalists, how do we find legitimate ways to get return on our investments?

Taiwan is now China's leading trade partner and investor. Over 25 percent of Taiwan's exports are headed to China, according to the latest official statistics. With its geographic proximity, a well-established technology and business support infrastructure, as well as a common language and similar culture background, Taiwan is well positioned as a gateway to the China. In addition, Taiwan has built a well-recognized capital market in the past three decades. This highly liquid capital market is the best support for the high-tech industry as well as VC players.

In this session, Katherine Jen, a veteran venture capitalist, will lead the audience through her strategy in the quest for the next wave of high-tech industry growth and identify the key success factors.

About the Speaker

Katherine Jen is the managing partner of AsiaTech Management, LLC, a venture capital firm investing in the Silicon Valley and Asia. Katherine's successful venture capital career began in the early eighties. During her two decades in the Ministry of Finance in Taiwan, Katherine ran a $3 billion government investment fund, instrumental in the founding of successful high-tech companies such as TSMC and Moses-Vitelic. She also served on the TSMC board of directors from 1989-1993.

Katherine was one of the pioneers in Taiwan's VC industry. She led many key initiatives in venture capital legislations, including the adoption of the first Venture Capital Act in Taiwan. She helped establish the first group of venture capital funds in Taiwan, including Hotung Ventures, H&Q Asia and Walden International Taiwan (IVCIC). In addition, she founded the venture capital firm Genesis Venture in Taiwan and successfully raised its first fund. As a leader in the Taiwan financial industry, she served on the board of International Commercial Bank of China (ICBC), the largest commercial bank in Taiwan.

Based on the belief that Silicon Valley technologies can find much broader markets if they are combined with the efficient manufacturing industry in Asia, she founded AsiaTech and raised its first fund in 1997. Today, with operations in the Silicon Valley and Taiwan, AsiaTech manages three funds with strong backing from Asian-based manufacturing companies, commercial and investment banks, and government.

Seeking to tap the huge potential of Greater China, many in Asia seek to replicate the Silicon Valley model. Yet, as much art as it is science, successful VC investing has proven to be uneven in Asia. Why? With respect to innovation, why is it that Asians have good reputations for replicating but not creating cutting edge technology? Is there a disconnect when this is compared to the experiences of U.S. high-tech icons, such as Intel and Apple, filled with Asian-born -- and in many cases educated -- scientists and businessmen? How does the Silicon Valley experience track with Singapore's determined efforts to promote creativity? What lessons, if any, are applicable to Greater China? With respect to entrepreneurship in Greater China, it is clear that Hong Kong, Taiwan and the Mainland are full of hard-driving individuals seeking to build wealth and prosperity. However, in some ways, is there perhaps an overabundance of entrepreneurship? Are there too many in this part of the world who want to be in charge and too few to follow and implement? How can a more productive form of entrepreneurship be fostered?

About the speaker
Dr. Ta-lin Hsu is chairman and founder of H&Q Asia Pacific (H&QAP), a premier private equity firm investing in Asia and the U.S. since 1985. Through ten offices in the region, H&QAP invests in a variety of high-growth sectors, including technology, biotech, financial services, media and branded consumer products. H&QAP manages sixteen funds with approximately $1.6 billion in assets invested in over 250 portfolio companies. Three of these funds comprise $1.1 billion in assets and invest on a diversified basis across the Asia Pacific region while the remaining thirteen funds are country funds.

Dr. Hsu holds numerous advisory positions with governmental and industry organizations. He was a founding member of the prestigious Technology Review Board of Taiwan, a group established to advise the Executive Yuan on all technology matters. Dr. Hsu was also a founder of the Monte Jade Science & Technology organization, the premier nonprofit organization promoting technology exchange between Taiwan and the U.S. He was also a founder and first president of the Bay Area Chapter of the Chinese Institute of Engineers, the largest Chinese-American engineering society in the U.S.

Dr. Hsu received his Ph.D. degree in electrical engineering from the University of California, Berkeley following a M.S. in electrophysics from the Polytechnic Institute of Brooklyn and a B.S. in physics from National Taiwan University. He was a staff scientist at Allied Chemical for two years before joining IBM Research Laboratories in 1973. Dr. Hsu worked at IBM for twelve years, reaching the position of senior manager in the research division -- with corporate responsibility for advanced research and development of mass storage systems and technology -- before joining Hambrecht & Quist as a general partner in 1985.

Dr. Hsu is an Advisory Board Member of the the University of California, Berkeley, Haas School of Business, a member of the Council on Foreign Relations, and a member of the Board of Trustees of the Asia Foundation.

This seminar is part 2 of SPRIE's 5-part series on "Greater China: Entrepreneurial Leaders."

From a venture capital investor's perspective, what are the key opportunities and challenges of doing business in China in the current environment? Why? How is China's emerging private equity investment industry? What are the major differences between "home-grown" Chinese private equity firms and foreign capital firms? Bobby Chao will address these questions, based on personal experience gained over the past twenty years.

Bobby Chao began his career as one of the five original founders of Cadence Design Systems. A year after Cadence's successful IPO, Bobby founded Ocron, a leader in Optical Character Recognition (OCR) technology and document management software. Bobby was chairman and CEO of Ocron until Umax Technologies, Inc. acquired it. He then became part of the Umax team serving as senior vice president of marketing in charge of corporate marketing and investment. Bobby was previously general partner for Technology Associates Management Company and has served as chairman and CEO of VA Linux Systems.

Mr. Chao currently serves as chairman of Dragon Venture Inc., a cross-pacific venture capital, consulting, and M&A company, bridging the U.S. and Greater China markets. Portfolio companies focus on telecommunications, Internet infrastructure, Linux, fables IC designs, and EDA. Mr. Chao is currently on the board of several companies and professional organizations.

Mr. Chao holds a B.S. in physics from Taiwan, an M.S. in physics from Georgia State University, and an M.S. in aeronautical engineering from Stanford University.