Diary of a Venture Capitalist

1
(No Transcript)
2
Diary of a Venture Capitalist
Chuck K. Chan Alpine Technology Ventures
Hong Kong-SV.com June 3, 2000
3
What is Venture Capital About?

• A nurturing process
• Growing apples from seeds
• Long time horizon
• Each one is different

4
A Parenting Process

• Have own baby
• Adopt or marry into
• Off to college
• Married Off

• Early Stage
• Later Stage
• IPO
• Merger/Acquisition

5
Objectives of a VC Firm

• Make lots of money (IRR)
• Stay out of jail
• No casinos or mahjong
• Have fun

6
Group Exercise - 45 minutes

• 200 million fund
• Economic and market outlook
• Resources within the group
• Unfair advantage
• Disadvantages

7
Team Presentation - 15 minutes

• Team member background
• Opportunity
• Strategy - Stage, product, marketplace
• Tactics - Deal flow, value add

• Other resources needed
• Deal selection criteria

8
Alpine Story - 1994

• Chuck Chan
• Ph.D.-MIT
• MBA-Harvard
• RCA Labs,
• Exxon
• Enterprises
• Spectra Physics
• Associated
• Venture
• Investors

David Lane BSEE-USC MBA-Harvard IBM Harvard M
anagement Company
Ray Chin Ph.D. EE-U of Illinois Rockwell, Amerite
ch MK Global Ventures
9
Alpine Story - Opportunity

• Rise of Asian American influence in Silicon
  Valley
• Recent successful Asian American founded
  companies encouraging others
• Growth in the PacRim economies

10
Alpine Story - Strategy

• Invest in Information Technology only
• Silicon Valley focused
• Deal flow from Asian American and traditional
  networks
• Leverage Asian American deal flow and PacRim
  network with other VC firms

11
Alpine Story - Tactics

• Deal flow from Asian American, VC and traditional
  network
• Hands-on, active involvement
• Selection process driven by over 30 years of
  cumulative experience
• Liquidity through IPO and acquisition by US
  and/or PacRim partners

12
Alpine Story - Other Resources

• Pauline Alker - Amplify.net
• David Lee - eON Communications
• Albert Yu - Intel
• Dick Strayer - Strayer Consulting
• Winston Chen - Solectron
• Ray Stata - Analog Devices

13
Alpine Story - Selection Criteria

• Quality of CEO
• Management team
• Product/market attractiveness
• Competitive advantage
• Barrier to entry
• Value added

14
Tale of Two Companies

• Founded by young engineer
• Invested in beta stage
• Brought in Marketing oriented CEO
• Kept burn-rate low till product proven
• Signed up first 100 customers
• Brought in big company CEO
• Targeting to book over 100M
• Filing for IPO

• Founded by young engineer
• Invested in beta stage
• Went through the motion of bringing in CEO
• Ramped up sales and marketing expenses while
  product was not working
• Wholesale defection of sales and marketing staff
• Tried to bring in CEO-founder forced her out
• Inexperienced co-investor backed founder and
  volunteered to step in to run company
• Co-investor did nothing and company ran out of
  money

15
Lessons Learned

• Venture Capital is a people business
• Invest in people with maturity, integrity and the
  right motivation
• Pick your co-investors carefully
• Each one will turn out differently but enjoy the
  process