Time will tell if US venture capitalists' business in Asia will serve as a safety cushion in the present crisis. These firms argue that technology companies that target Asian markets, especially China and India, will be less affected by the market gyrations, even if the countries' growth rates slow to 7-8% a year.
San Francisco-based Walden International is one of these venture capital firms. It has $1.9 billion under management, and invests in US and Asian start-ups with the goal of leveraging their market capabilities. It is one of the oldest venture capital firms in the industry, with a focus on semiconductor, electronic and digital consumer product developers, software and IT services, communications, and cleantech companies.
Walden International managing director Andrew Kau will visit Israel to participate in the "Globes" and Ernst & Young Israel 12th annual Journey Conference 2008 that opens on November 3 at the David Intercontinental Hotel in Tel Aviv. Kau joined the firm in 1997. In an interview with "Globes", Kau says that, while the crisis will apparently be prolonged, he is optimistic and feels that Walden's strategy protects it from damage.
Kau says, "Everyone feels the poor sentiment now. The crisis will be long, and all markets will fall sharply. We're preparing our companies to be ready for a long recession. A ray of light for us is that China and India export a lot, their markets are major growth engines that are not necessarily export-driven. Private consumption in these markets is still growing, and will probably reach 8% a year. There will unquestionably be a global recession, which will affect both China and India, but there are still markets in Asia that may only slow down, but not grind to a halt."
Walden International has invested in Israel since 1987 and was a partner in Walden Israel, sometimes making joint investments with it until the two funds parted ways in 2000. Walden International has subsequently invested in four Israeli start-ups: Actelis Networks Inc., Matisse Networks Inc., Narus Software Inc., and SolarEdge Ltd.
Kau says, "Walden is a global fund that invests in early-stage technology companies in the US and in various Asian markets. Our strategy focuses on locating US companies whose activity can be leveraged in Asia."
"Globes": What about Israel? Are you seeking deals here?
Kau: "We're looking for hybrid companies all over the world. The trend of leveraging global capabilities encompasses all high-tech fields, and Israel is a suitable place. We're definitely looking at companies with this model, which can leverage their technology in Asian markets. Our investment in SolarEdge is an indication of our intentions - companies with R&D in Israel, and offices in the target market, Europe, the US, or Asia."
Who helps you find opportunities in Israel?
"We used to work with Walden Israel. Today, Walden Israel general partner Roni Hefetz helps us locate opportunities."
Do you have designated funds by geographical regions?
"Investment is from a single fund, which differentiates us from other funds."
At least two Israelis funds offer a similar strategy of focusing on the Chinese market: Israel Infinity Venture Capital and China Israel Value Capital (CIVC). Why would entrepreneurs choose to work with you?
"Because we've been operating in Asian markets since 1987. We have partners, ties, and longstanding relations with large corporations, and we have offices all across Asia. That's our forte. There are many funds that offer to help companies reach Asian markets, but we've already been doing this for years."
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2008
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