August 24, 2005

Talking It Up

Continued from page 1

By Jon Burke

Shanghai -- Once Again -- Is a Thriving Center of Business
China is still hot -- and other alarm:clock news from the land of private venture funding.

The successful IPO of the Chinese search engine Baidu, mentioned here two weeks ago, has drawn renewed attention to the growing number of tech-related investment opportunities in China. With companies like Yahoo joining the rush earlier this month, by investing $1 billion in Hangzhou-based search engine Alibaba, the drum beat grows louder.

With increasing frequency, we are encountering companies like 99bill.com, a Shanghai-based e-commerce infrastructure company that offers an e-mail and mobile phone online payment platform. On August 11, 99bill.com received an undisclosed Series A round of venture funding led by Doll Capital Management and Peninsula Capital. The company claims that Internet-based transactions reached $2.8 billion in China in 2004. It hopes to facilitate the growth of this market going forward by making transactions easy to complete on the Internet.

Although Internet- and consumer-related investments will continue to attract the most attention from the media because of the potential spending power of China’s 1.3 billion citizens, we’re also keeping an eye on less glamorous, yet potentially exciting investment opportunities.

In the past, we have mentioned Huawei Technologies -- calling it the biggest private company you’ve never heard of. Huawei had 25,000 employees and reported sales of $5.58 billion in 2004. The company sells a broad range of telecom networking equipment, from wireless and wireline products to data networking equipment.

And, last week, we came across VeriSilicon, a Shanghai-based semiconductor design company founded in 2001. It's an ASIC design foundry -- basically a low-cost builder of customized chips. The company provides outsourced services that run the gamut in chip design and boasted 140 engineers prior to its latest round of funding. VeriSilicon says it has over 400 customers worldwide.

On August 15, the company closed a Series B round of financing of $13.5 million from existing investors WI Harper Group, IDG Technology Venture Investment, iGlobe Partners, and Harbinger Ventures, and new investors Intel Capital, HSBC Private Equity (Asia), CID Group, Legend Capital, KTB/UCI, and International Finance Corporation (IFC). This brings its total funding to $20 million.

Its CEO is Wayne Dai, who was previously CTO of Celestry Technologies, which was acquired by Cadence Design Systems in 2002. He has a PhD degree in Electrical Engineering from U.C. Berkeley and was a professor at U.C. Santa Cruz.

Meanwhile, one of VeriSilicon's more prominent investors, Intel, also announced two other China-based investments from its $200 million Intel Capital China Technology Fund. The Santa Clara-based chip giant invested an undisclosed amount in Hong Kong-based Chipsbrand Microelectronics, a fabless semiconductor design company, and Shanghai-based Onewave Technologies, a broadband entertainment technology company.