Chapter 6 Conclusions and Suggestions
6.2 Suggestions
Meanwhile, there are also the suggestions for the VCs in China and the future studies regarding the development of VC in China,
1. VC firms in China should strengthen the investees in cooperate governance
Venture capital in China will continue to grow. As international venture capital investors seek to diversify their investments, an obvious move is to include China-based firms in their portfolios. The VC industry in China still needs a period of transition as the market continues maturing. The venture capitalists must be prepared and well versed in the nuances of the environment there if they hope to seize the opportunities present in this intriguing and complex market and help entrepreneurs to grow their firms. Moreover, the
financial fraud of Chinese enterprises has seriously destroyed confidence of international investors. The VC firms in China should play an aggressive role in conducting thorough due diligence, and provide management (including cooperate governance) and personnel assistance to investees rather than seeking the shortest exit period for higher return.
Thereafter, the Chinese enterprises could be on the right track to a well-developed capital market, which is also healthy for the VC industry and stock markets.
2. Taiwan stock markets should open door for the IPO of Chinese enterprises
With the economic integration in East Asia, Taiwan should aggressively join the integration of stock markets to prevent itself from being marginalized. In fact, the stock markets in Taiwan have unique advantages to attract foreign enterprises for listing. However, the authority’s concern on Chinese capital and strict controls on foreign exchange remain as the main weakness. For Chinese capital, it is suggested to revise the regulation on monitoring the financial report quality rather than the nationality of the influential shareholders. We believe there should not be any further delay to revise the general restriction on “Chinese”
investment and IPO in Taiwan while signing the agreement with China on Investment Protection and Currency Settlement.
3. M&A of Chinese enterprises are the emerging opportunities for investors
We expect the merger and acquisition activities for the Chinese enterprises to get increasingly popular, whether it is on shore or offshore. This was because Chinese enterprises were growing organically in the past. However, the needs for future growth or know-how acquiring should be the next task that Chinese enterprises focus on. On the other hand, they hold ample resources such as fundraising easily from the stock market based on the advantageous valuation and cash flow from their operations. Accordingly, the Chinese enterprises should be in a beneficial position to supersede the foreign enterprises that are
suffering from the economic downturns since 2008. We believe this is an opportune time to set PE for restructuring purposes.
Appendix-1: China Venture Capital & Private Equity Annual
Source: Zero2IPO (2012), China Venture Capital & Private Equity Annual Ranking－2012.
37 The reference system conducted by the Zero2IPO for the ranking includes such indicators as the amount of managed capital, the amount of managed capital, the amount of newly financed fund, the number of investment cases, the amount of investment capital, the number of exit as well as the return on investment, etc.
Appendix-2: Top 20 VC Firms—2007~2011
Venture Capital Firm
Ranking
2011 2010 2009 2008 2007
Shenzhen Capital Group Co.,Ltd. 1 1 1 1
China Science & Merchants Capital Management Co, Ltd. 2 8 4
IDG Capital Partners 3 3 4 2
Jiangsu Govtor Capital Group 4 6 5 14
Sequoia Capital China 5 2 3 3
Fortune Venture Capital Co., Ltd. 6 5 2 8
NewMargin Ventures 7 7 8 16
Legend Capital 8 10 7 5
Qiming Weichuang Venture Capital Management (Shanghai) Co., Ltd. 9 21-50 20 17 Shenzhen Co-win Venture Capital Investments Limited 10 9 21-50
SAIF Partners 11 4 6 4
GGV Capital 12 14 15
HAPPY-SLICON CAPITAL MANAGEMENT GROUP CO.,LTD. 13 21-50 -
Matrix Partners China 14 21-50 21-50 13
Suzhou Ventures Group 15 21-50 21-50 11
Zhejiang Sino Wisdom Investment Co., Ltd. 16 21-50 -
Softbank China Venture Capital 17 17 11 12
GSR Ventures 18 21-50 18 21-50
CDH Venture 19 12 10 6
Kleiner Perkins Caufield & Byers China 20 18 21-50 9
Source: Same as Appendix-1.
Appendix-3: Top 10 Domestic VC Firms—2010~2011
China Science & Merchants Capital Management Co, Ltd.
(中科招商創業投資管理有限公司)
Shenzhen Fortune Venture Capital Co., Ltd.
(深圳達晨創業投資有限公司)
9
Suzhou Ventures Group (蘇州創業投資集團有限公司)
SHENZHEN ORIENTAL FORTUNE CAPITAL CO.,LTD
(深圳市東方富海投資管理有限公司)
10
Zhejiang Sino Wisdom Investment Co., Ltd.
(浙江華睿投資管理有限公司)
Zhejiang Sino Wisdom Investment Co., Ltd.
(浙江華睿投資管理有限公司)
Source: Same as Appendix-1.
Appendix-3: Active Taiwanese VC Firms in China—2010~2011
Set up Year Venture Capital Firm
1995 AsiaVest Partners, TCW/YFY Ltd (永威投資有限公司)
1998 The CID Group (華威國際集團)
2000 iD TechVentures Inc. (智基創投)
2010 Yuanta Venture Capital (元大創業投資股份有限公司)
Source: Same as Appendix-1.
Appendix-4: Top 10 Foreign VC Firms—2010~2011
Kleiner Perkins Caufield & Byers China (凱鵬華盈中國基金)
10
Kleiner Perkins Caufield & Byers China (凱鵬華盈中國基金)
DT Capital Partners (德同資本管理有限公司)
Appendix-5: Basic Requirements for the Admission of Securities to the Selected Capital Markets
Markets NYSE NASDAQ Hong Kong Singapore Taiwan
Shan-ghai
or
Publicly owned > 25% Publicly owned > 20% of shares or 10 million share
-ed
three
Source: Same as Table 5-11.
s fiscal year >
US$
110 million
or Previou
s fiscal year >
US$ 90 million Operating
Track Record
3 3 0-2 3 3 - - 3 2 3
Number of market makers
NA 3 or 4 3 or 4 - - - - 2 2 1
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