Success in China is affecting the Silicon Valley venture capital
hierarchy. Silicon Valley’s current obsession with China is not just
affecting the top-tier firms' investment approach to companies in Asia,
but how they put together their investment syndicates stateside. The
top-tier firms are bringing newer rivals into some of their most
promising deals in Silicon Valley in the hopes that those upstart firms
can introduce the startups to corporate customers or cheap but trusted
manufacturers in China.
Granite Global Ventures is benefiting from this trend. Scott Bonham,
managing director of the Sand Hill Road firm, explained over lunch at
the California Café in Palo Alto that Granite Global’s successful
investments into Chinese portfolio companies such as Alibaba.com and
Hurray Holding Co. Ltd. strengthens its deal flow in Silicon Valley.
Top-tier firms want to bring in investors for their portfolio
companies that can provide them with an edge in Asia. For example,
Bonham traveled with the engineers at portfolio company 2Wire Inc. to China recently to introduce them
to people and companies that could help the San Jose-based DSL platform
maker lower its manufacturing cost base. It also helps that Granite is
an expansion stage investor that doesn't compete directly with many of
the early stage venture firms.
Changes at the top-tier of the venture capital world don’t occur overnight.
One of the key ingredients to rising up the ranks is gaining access to
the best deals. And it seems one way to do that is to leverage
knowledge of the confusing, but coveted, Chinese market. —Joshua Jaffe
For more on the Chinese VC market, read Ymer
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