People Are Becoming Much More Reticent About China Than They Were A Year Ago!!

We recently covered Matt Marshall's views on risks in Investing in public company in china and also referred to Economist Donald Straszheim's views investing in SOEs traded as ADRs is a far-from perfect way to play Chinaand his recommendation to stay off investing in big chinese state owned enteprises. In a recent article discussing venture capital flow in the US market, Matt Marshall writes,venture firms continue to confront the challenges of investing in places like India and China. He writes,"Venture capital firms are still raising large amounts of money from their investors, but data about their actual investments in U.S. start-ups is showing anemic growth at best". The possibility that more start-ups are staying in "stealth" mode longer, making data collection about venture investments difficult, or that the increase in money being raised by venture capitalists is just a cyclical thing - they're replenishing their coffers, but don't necessarily have more money than usual to give out. The move will happen, but it will be more "glacial"than sudden, as venture firms continue to confront the challenges of investing in places like India and China. Particularly in China, VCs have to deal with things like lax protection of intellectual property, and government restriction on repatriating profits. "People are becoming much more reticent about China than they were a year ago.".
Battery Ventures, which has offices in San Mateo, raised a $450 million fund in September, and recently led it's first investment in India: $15 million in Bangalore's Tejas Networks, which is developing optical networking products in the Indian market for a fraction of what American companies do, says partner Thomas Crotty. Battery hopes to help it expand into the U.S market with the help of a partnership with Nortel, he said. Matrix Partners, another big-name firm with offices in Menlo Park, also recently opened an office Bangalore to start investing there. They plan on about one or two a year. It is a good sign - sign of maturity that VC's are beginning to closely examine investment benefits and trying to internally assess the impact of run to china for investment movement. Open society, good investment framework and strong IP and legal framework, repration benefits are minimal requirements for sustainable investments and growth.