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Second Board Will Attract More Venture Capital: IDG
The International Data Group (IDG), a US-based IT media, research and exposition company, forecast that the establishment of China's technology securities market would help attract more venture capital into its potential technology market and support the development of new high-tech companies.
Patrick McGovern, founder and chairman of IDG, said the market, which is expected to be set up at the end of year or beginning of 2001 in Shenzhen, would enable more new companies to raise funds and develop in the competitive market.
He said China is going to be a major IT market in the world as it has rapidly developing national market, well-trained people and a legitimate investment environment.
Twenty per cent of its high-tech related projects are possible candidates for listing on the technology board, he said.
China has become IDG's second largest investment market following the US which accounted for 3.5% of its total shares.
So far, more than 80% of its 80 investment projects in China are successful, according to McGovern.
IDG's venture capital fund has invested US$140 million in technology companies in China, and the total investment will reach US$1 billion in five years.
Among 80 projects the company has invested in China, Sohu, China's second largest portal, which the company has acquired about 10% shares, was listed on the US Nasdaq.
The Shenzhen-based Kingdee Software is planning to list on Hong Kong's Growth Enterprise Market.
And 8848.com, a successful e-commerce company, also has its listing plan for the near future.
Another four companies the company invested have been acquired, which could realize five to six times investment return to the company, said McGovern.
He said venture capital in China could gain an average of 70 to 80% returns while in the US the average is 30%.
According to McGovern, 50% of its investment projects are Internet-related companies and most of them are choosing the B2B model.
He attributed his company's success partly to the fact that it always inject venture capital when the company is still in the early stage.
Venture capital should be more than capital investment, McGovern said. Venture capital companies should provide all kinds of services to help the development of the companies including arranging the company to go public.
He believed consolidation of the dotcom companies is reasonable as more people establish dotcom companies which create unwanted competition and made the market too crowded.
"Venture capital investors could also benefit from the consolidation," said McGovern.
He suggested that Hong Kong should strengthen scientific information education to train more IT talents.
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