Ventech, a subsidiary of Natixis Private Equity, now stands out from all its local competitors by becoming a global player in venture capital.
A well-structured and considered approach to the Chinese market
Aware that in the field of technology, China occupies second place behind the United States, Ventech – a major risk-capital firm in France and continental Europe – has today announced the signature of a partnership with CMHJ (China Merchant Hidden Jade), a Chinese company specialising in venture capital.
This agreement is the result of several years’ discussions. Ventech had already set up the “China Consortium” Business Development Platform in 2006, with several European risk-capital firms and China Expansion.
Following a successful initial experience in business development – thanks to this platform – for Viadeo (one of the companies in the portfolio), Ventech decided to go further and position itself as a credible actor in China for the coming years. The risk-capital firm then met with a wide range of companies involved in the Chinese market, including its future partners, and drew up a long-term strategy for the country.
It is worth noting that the Chinese venture capital market is booming. Risk capital investment is growing continually, increasing from 1 billion dollars in 2005 to 3.2 billion at the end of 2007. Furthermore, 2007 was an outstanding year, featuring 92 IPOs, 47 funds launched and 23 billion dollars raised. New media, dedicated mobile phone services and all telecom-related hardware were the best-performing sectors.
After meeting 30 venture teams, Ventech finalised the launch of a dedicated Chinese fund and signed the agreement with CMHJ at the start of 2008. Several factors supported the choice of this firm. The company is sponsored by China Merchant Group, the second largest Chinese consortium, one of whose holdings is China Merchant Bank, the best-performing Chinese banking network. CMHJ also pursues a similar investment strategy to Ventech, with an excellent track record (37% gross IRR for fund I launched in 2001, a percentage that should double this year). CMHJ carries out early stage investment in information-technology industry derived companies (Web, mobiles, services based on technology and semi-conductors).
Investment sponsored by Natixis Private Equity
The partnership agreed between Ventech and CMHJ is based on three elements:
- As Limited Partner investment, sponsored by Natixis Private Equity,
- A right to co-investment in companies CMHJ chooses to invest in, also sponsored by Natixis Private Equity
- A Ventech team within CMHJ: Cindy Guo in charge of co-investment and Bruno Bensaïd, managing business development.
The new funds will mainly be invested in TICs and will meet dual objectives:
- Exploiting the opportunities provided by the Chinese market and the development of the IT sector: China currently has 540 million mobile phone users and 180 million Internet users, putting it at the highest level worldwide, plus 128 million cable TV subscribers;
- Supporting European companies that wish to set up in China. Currently, three out of four IT-sector companies in the Ventech Capital III portfolio have plans to develop in China.
Ventech has become the first venture capitalist to set up in China and to step up from being a local to a worldwide player, with a presence in Europe, Asia and the USA. This partnership provides Ventech with distinctive added value for the companies in its portfolio and a competitive advantage compared with other, purely local, European funds.
CMHJ, an experienced and well-known team
The two managing partners, George Li and Darren Ho, have 14 and 9 years’ experience in venture respectively and an impressive track record (they invested in such companies as Alibaba, Focus Media, Baidu, etc).
Ventech operations in China will be led by Eric Huet, General Partner with Ventech since 2000 and chairman of Ventech China. In leading this development, he will be supported by:
- Bruno Bensaïd, who will focus on business development between Europe and China for high-tech companies. He has lived in China for ten years and has worked for companies such as Philips, Cisco and In-Fusio. He was recently a Partner with Asia Bridge, a consultancy firm for technology companies setting up in China.
- Cindy Guo, who will be responsible for studying co-investment opportunities, worked for a private incubation company, Ascend Venture Partners. Cindy Guo has also developed an extensive network in the world of start-ups, especially in Beijing.
Many current projects
Several companies from the Ventech portfolio are already directly involved in set-up projects in China, including:
- NEMOPTIC, an independent start-up in the field of liquid crystal displays, has already identified a strategic partner in Asia for sub-contracting manufacturing;
- KEOPSYS, a specialist in optical amplifiers, has just signed a strategic agreement with Huawei, one of the world’s leading suppliers of new generation networks for telecomms operators;
- WENGO, an Internet platform that enables people to monetize their expertise and to interact directly with experts, has just completed a reciprocal shareholding with a Chinese company;
- EYEKA.COM, which enables brands to create their own Web TV and mobile TV, has carried out a technology transfer to set up a Chinese me-too.