Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on September 14, 2012

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Keynote Address:

Michael Goldberg
Managing Partner
Bridge Capital Fund

While China and other tightly controlled economies in Southeast Asia don't have much of a tradition of private capital formation, at least outside the family unit, that's slowly changing. And it's changing especially quickly in China, which began permitting outside private equity groups to operate in the country about five years ago.

That was the message Michael Goldberg delivered to OVA members at their September luncheon. Fresh off a seven-month excursion through the region while on a Fulbright Fellowship, Goldberg, who's managing partner of the Israeli-based Bridge Investment Fund and also teaches as an adjunct professor at the Case Western Reserve University Weatherhead School of Business, gave an overview of the investment climate there.

He found tremendous interest across Southeast Asia in how America supports domestic entrepreneurship with an entire ecosystem of support. Based mostly out of Hanoi, Vietnam, where he co-taught a class on entrepreneurship at National Economics University, he also traveled widely and lectured in nearby Laos, Myanmar and Burma. Goldberg even spoke about entrepreneurship a couple of times at the American embassy. "I had a very diverse audience, including two monks," he said.

"They're so hungry for information. The people that attended the seminar are running incubators and offices of technology transfer, and they are so interested in what is happening in Ohio."

The growth potential is enormous, he said, especially in still-booming China. "China's likely to surpass Europe by the end of this year globally, in terms of venture activity." Beginning in 2007, high net worth individuals began deploying private equity in China, and the government permitted major western private equity players such as Carlyle, Sequoia and Blackstone to raise funds in China. "They have raised some money, but not as much as they expected."

Local currency funds are also beginning to crop up, he added. Their advantages include the ability to move more quickly than dollar-denominated funds, raise money locally, and more easily exit their investments. While the fund he works with focuses on early stage opportunities, he noted that most of the private equity being deployed in Southeast Asia is directed toward later-stage and expansion opportunities.

"Some of that has to do with the limited partner and investor base in China. Their patience for longer-term investment and returns" is not the same as in the U.S., where the average time for a deal from initial investment to exit is 11 years, and the hope is to perhaps shave that down to more like seven or eight years. "You talk to a Chinese or Vietnamese investor and tell them you're going to take their money and get it back to them in seven or eight years, and they think you're crazy. They want their money back in two or three years. As a result, there's a glut of capital chasing relatively few deals."

But things will remain challenging for the foreseeable future, he emphasized. "This is not news to anyone in this room. But as an industry, venture capital performance as an asset class has been difficult, so subsequent fundraising has been a challenge. And we're beginning to see the fundraising challenges in China as well.

More information:

Webcast from the Meeting:

Click on the image below to view the entire presentation as video.

Video Webcast from Recent Meeting
Webcasts produced by Tom Kondilas.

OVA's New Video Archive is Online:

OVA is pleased to have recently added an archive of program videos to its website. You'll find the full video record of most OVA formal programs since 2008 at www.ohioventure.org/video-archive.html.

Upcoming Meeting Dates:

  • October 17-18, 2012
    Great Lakes Venture Fair
    Learn more

See complete details and registration for these events.
 

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Newsletter Sponsors:

The Oho Capital Fund

Taft Stettinius & Hollister

Glengary LLC

Chrysalis Ventures

Early Stage Partners

Edison Ventures

Draper Triangle Ventures

Fir Hill, LLC

Ciuni & Panichi

Copy by John Ettorre
Working With Words

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