We’re in the midst of fund raising now. It’s been an educational process.
Two weeks ago, we spoke with a placement firm which helps funds raise money from institutions. We were told that we are too small for institutions to be interested.
They apparently want to invest at least $10MM into a fund. This is because of their own size, which many institutions are now in the billions of dollars. It simply does not make sense for them to place money into another vehicle at less than that amount. They need to put larger amounts of cash to work, at one time.
The next constraint is that they want to be no more than 10% of any venture fund. This means that any fund they invest into must be at least $100MM in size.
With us at $25MM, we’re too small for them. We’re thinking about this as we continue our talks with other potential investors.

On my trip to Shanghai, I met a journalist working on a book about venture capitalists working now in China. It will be published in Chinese which kind of stinks since I can’t read Chinese, and I can’t wait until it gets translated to English. The journalist asked me what kinds of things a potential reader might be interested in, and I sent her a list:
1. What are the pros/cons of being in China?
2. What are the difficulties in working in China?
3. What makes it easy to work in China?
4. Where are the dollars being invested now? It would be great to show some stats, as they are extremely hard to get. As you interview the VCs, they might be willing to share an industry breakdown with you.
5. What are the current opportunities?
6. What are the trends?
7. What are the risks?
8. How is money extracted from China?
9. What are the corporate structures that enable foreign investments or ownership in China?
10. How does one deal with the chaotic environment, ie. Business climate, inconsistent legal/political system, etc.?
11. How does one deal with trust issues?
12. How does one become a VC in China? Are there legal and regulatory issues?
13. Is fund raising possible within China? Asia? Or does most of the money come from overseas?
14. Show case studies of successful/unsuccessful investments. How/Why did they succeed/fail?
15. Top 10 things to do to increase chances for success, Top 10 things not to do.
16. How do you deal with language issues?
17. What are the notable cultural differences to watch out for?
18. How receptive are entrepreneurs for help beyond money? Examples?
19. How would you characterize investors in China today? How would you characterize entrepreneurs in China today?
So much is a mystery to Westerners about China, similar to the days when I worked extensively in Japan building the Quicktake 100 for Apple with Kodak Japan and Chinon. Culturally, Chinese people are similar in many ways as they are different; it’s the differences that sometimes confound Westerners who try to work overseas. The subtlties get tripped over, often with disastrous results.
And now, with billions of dollars going into China, the stakes are much higher. So many variables, and so many things moving so fast. Will the government institute legal systems to make it more stable to do business there? Will the currency be an attractor or a hinderance? Can the Chinese people emerge gracefully from their Communist roots and support capitalism? Can the people resolve the class differences between those who have and those who have not?
All questions to ponder, and to watch history in the making over the next few years, as we watch China emerge truly into the 21st century.

Seen on the onramp to 90, from Marina Del Rey, a sign stapled to a telephone pole:
Business Plans
Grant Funding
Business Funding
50K – 1 MM
Call this 800 Number
Which venture fund do you think this is?