Source: CCTV.com

02-13-2008 16:32

So far, we've had a chance to get an overview of the bullish industry, hear how the investment trend is changing from TMT to Traditional, and discover what's important from both the investors'and entrepreneurs' perspectives.

Today, in our final installment, we recap the highlights in 2007, explore why China needs this industry, and take stock of what we can expect, in going forward.

2007 was a marquis year for China's still growing Venture Capital industry.

Record amount of new funds raised.

Record amount of investments.

And a clear shift from TMT or technology, Media and Telecommunications, to more traditional industries.

So are we experiencing that one element-that all economists fear...a bubble in the VC industry? Those in the thick of it, don't think so.

Zhang Fan, Founding Managing Partner of Sequoia Capital China said "The macro environment in this country from what I see offers a very attractive investment spot for global venture capitalists. Many sectors, many industries are still in need of dominating brand names, dominating companies where young talents, young companies are still in the formation stage, And you can just see within a decade or two, many outstanding ones among the young emerging companies are going to be global brand names. "

And other industry experts, echo the bullish sentiment.

Gavin Ni, CEO of ZERO2IPO said "Of course there will be a new company like Baidu that can make ten billion dollars, maybe 100 billion company in the future."

With over five billion US dollars raised in 2007, there's no denying that the VC industry in China is flushed with cash and confidence. Bao Fan, the CEO of China Renaissance would know. His company focuses on providing financial advise to Chinese entrepreneurs. Business has never been better. And he says the VC industry is more than just about the money.

Bao Fan, Founder and CEO of China Renaissance said "If you look at these entrepreneurs, their alternative source of funding is quite limited. Banks will not lend them money, right? And in terms of accessing capital markets, often times they're too young, too small. So VCs and PE are very important for their growth. In a way, I would go so far as to argue that they also enhance the productivity of this country. So I think the country needs this industry, and the entrepreneurs need their capital."

Productivity and perhaps even innovation? But compared to other countries, experts say China still has its work cut out for it.

The Organization for Economic Cooperation and Development, a Paris based think-tank, issued a report in August 2007 on China. The report says that the country "needs to facilitate venture-capital investment to meet its goal of becoming an innovation-oriented economy by 2020."

So what exactly are the challenges? More VC talents are needed. More favorable tax policies. Better IPR protection. A stronger legal framework. All are vital. Industry players are also keeping their fingers crossed that talks of a local Growth Enterprise Index similar to the NASDAQ will also become a reality, perhaps as early as this year. But-here's the bottom line.

Bao Fan said "For the Private Equity and Venture Capital to do well-it has to be market driven. The people that give the money. The people that manage the money. And the people that take the money-that has to be based on a market economy. "

Every VC hopes that their investment, will be a runaway success. And every entrepreneur has the same dream. But that's not always the case.

Some will lose, some will succeed, and some are still waiting to find out.

Wang Lifeng CEO of Eastar Digital Animation said "As an animation studio we want to be the best animation studio not just in China, in the world."

An ambitious goal indeed. But if the going gets tough Chinese entrepreneurs can take heart in this one simple fact. They can always pick up the pieces, and try again. Because China's VC industry, is here to stay.

 

Editor:Xiong Qu