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David J. Lam, Managing Director, WI Harper Group

Stanford University May 25th, 2010

Early  Stage  Inves/ng  in  China  

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Chinese  Internet  2.0  Google  strategy  shi.  creates  opportuni3es  for  start-­‐ups  

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Second  Wave   Third  Wave   Mature  Market  First  Wave  

Web  portals  in  late  1990’s  created  the  first  boom.  

Technology  companies  Baidu,  Tencent,  Shanda  rose  from  the  ashes  of  dot-­‐com  bust.  

We   anCcipate   an   explosive   third  wave   propelled   by  Mobile   Internet,  E-­‐commerce,   Online   Gaming   and  Cloud  Compu/ng.  

Chinese  Internet  2.0  Poised  for  third-­‐wave  of  growth  

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Target  Sector:  Mobile  Internet  

• Carriers  are  beJng  on  Mobile  Internet  • Affordable  mobile  devices  will  cause  explosive  growth  • Devices,  bandwidth,  applicaCons  will  create  a  virtuous  cycle  • Growth  will  be  from  users  under  30  • Focus  on  “killing  Cme”  rather  than  “saving  Cme”  

(millions)  Chinese  Mobile  Internet  Users  

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Target  Sector:  e-­‐Commerce  

Data Source: iResearch, IAB & emarketer

e-­‐Commerce  Development  

•  Payment  has  been  solved  via  escrow,  COD  

•  Logis/cs  problems  also  solved!

•  Taobao  =  50%  of  packages  shipped  •  B2C  rapidly  growing,  gaining  trust  •  In  each  domain,  top  2  B2C  will  be  valuable  

•  Yet,  gap  with  US  is  s/ll  50x  (!)  in  e-­‐commerce!

e-­‐Commerce  Accelerates  Adver/sing  

•  E-­‐commerce  makes  adver/sing  measurable  &  targetable  

•  E-­‐commerce  makes  adver/sing  more  valuable  

Huge  opportunity  as  China  grows  to  match  the  U.S.  

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•  China  has  no  soXware  industry  today  due  to  piracy  •  Cloud  Compu/ng  will  create  opportuni/es  for  a  cloud-­‐soXware  industry  

Cloud  Compu/ng  Opportuni/es  

•  Chinese  engineers  are  plen/ful,  talented  and  lower-­‐cost  •  Find  global  opportuni/es  that  can  leverage  this  

China’s  top  engineering  talent  can  tackle  global  opportuni/es  !

Cloud  Compu/ng  may  create  a  “new  soXware  /  IT”  industry  in  China!

Future  opportunity:  cloud  infrastructure  

•  Chinese  websites  not  sophis/cated  to  appreciate  elas/c  services  yet  •  As  they  mature,  opportuni/es  will  be  emerge,  since  no  Amazon/Google!

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Founding  a  Chinese  Start-­‐up:  The  Problem  Major  deficiencies  in  China’s  start-­‐up  infrastructure  

       Nascent  angel  network  1  

Home-­‐grown  CEO’s  need  mentoring  2  

Fear  of  failure  by  top  engineers  3  

Tough  to  assemble  a  full  team  4  

Angel & VC Funding

China  2.0  start-­‐ups  are  less  expensive  but  more  risky  than  in  Silicon  Valley  

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CEO  Risk  

Financing  Risk  

Founding  a  Chinese  Start-­‐up:  The  Solu/on!

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Team  Risk  3  

Opera/ng  Risk  4  

China  needs  a  full  service  model  to  fill  the  “infrastructure  gap”  

Innova/on  W

orks  

Start-­‐up  Infrastructure  

Innova/on  Works  established  to  launch  next  genera/on  of  China  2.0  leaders  

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Innova/on  Works:  Building  an  Early  Stage  Ecosystem  

VC  func(on  –  Angel  /  Series  A  stage  Incubator  func(on  –  Seed  stage  

Separa3ng  “Opera3ng  Capital”  from  “Inves3ng  Capital”  

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Born  

•   Taipei,  Taiwan  

Educa3on  

•   B.Sc.  Computer  Science  from    Columbia  University  (Summa  Cum  Laude)  

•   Ph.D.  Computer  Science  from    Carnegie  Mellon  University    

Awards/Honors  

•   Built    “ho]est  computer  science  laboratory”  in  Asia  according  to  MIT  Tech  Review  

•   Ph.D.  thesis  named  “Most  Important  InnovaCon  of  1988”  by  Business  Week  

•   Vice  Chairman  of  the  Commi]ee  of  100  

•   Fellow  of  the  IEEE  •   Honorary  Doctorate  from  HK  City  University  

•   Author  of  four  best-­‐selling  books  in  China  

Innova/on  Works:  Chairman  &  CEO  Dr.  Kai-­‐Fu  Lee  

Assistant  Professor  Youngest  associate  professor  at  26  

VP  of  InteracCve  Media  Group  Developed  PlainTalk  and  QuickTime  

General  Manager  at  SGI,  Web  Products  Division  Grew  business  to  $200  million  

Founder  of  Microsoe  Research  Asia  Developed  key  tech  in  Office  and  Windows  

Founding  President  of  Google  China  Market  share  increased  from  10%  to  35%  

Launched  in    September  2009  

(1988-­‐1990)  

(1990-­‐1996)  

(1996-­‐1998)  

(1998-­‐2005)  

(2005-­‐2009)  

(2009)  

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Innova/on  Works:  Recrui/ng  Top  Engineering  Talent

Resumes  in  1st  Day   Resumes  in  1st  Day   Resumes  in  1st  Day  

1000 3000 7000

•  100,000  resumes  received  to-­‐date  

•  World  Programming  Champion  •  Google’s  Programming  Contest  #1  in  China  •  Baidu  Chief  SoXware  Architect  •  Top  SoXware  Company  VP  Engineering  •  Tencent  PM  Director  •  Top  Android  Start-­‐up  CTO  •  Engineers  from:  

  Baidu,  Tencent,  Microsoe,  IBM,    Google,  Motorola,  Red  Hat,  Nokia  

•  Top  Graduates:    27  of  30  from  the  Top  5  schools  in  China  

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Innova/on  Works:  Turning  the  Flywheel  

•  Support  from  government,  industry  leaders  

•  Investment  from  Chinese  and  foreign  investors  

•  80  engineers,  6  projects  under  development  

•  First  seed  financing  in  Q2:10  

•  First  product  launch  in  Q3:10  

•  Focus  areas:  Scaling  ideas,  sourcing  EIRs,  growing  team  

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Thank  You!  For more information and/or to explore career

opportunities at Innovation Works, please contact:

David J. Lam Managing Director WI Harper Group

dlam@wiharper.com