VCs Fly Friendlier Skies to Asia, Says VC65 Panel

Venture capital firms are increasingly welcoming Internet and tech startup investments in developing markets, including South America and Asia, they said Wednesday at the VC65 gathering in Boston. And they’re being welcomed right back.

Asian countries seek to host American businesses coinciding with China’s loosening of borders for foreign firms, Draper Fisher Jurvetson Managing Director Tim Draper said, calling it “competitive governance.” Draper said nations including South Korea are welcoming investors to kick-start developing tech and Internet industries.

“Governments are in competition with one another for all of us [VCs in attendance] and for entrepreneurs,” Draper said at the VC65 event, which was co-sponsored by the National Venture Capital Association, Xconomy and the MIT Museum.

To be sure, China has not welcomed American business unfettered — its standoff with Google highlighted a rigid policy of censorship. However, Harvard Business School Prof. Bill Sahlman said the current environment is a stark contrast to China’s prior policies of “crushing” capitalism. Sahlman spoke with Draper on a panel covering foreign investment.

The panel discussion coincided with a recent ramping up in U.S. VCs’ investment strategy toward foreign nations, particularly Asia. Bessemer Venture Partners, Insight Venture Partners and Accel Partners just completed billion-dollar-plus fundraising rounds and each of the venture firms is anticipated to spend varying amounts of capital developing Internet economies abroad.

Still, investor optimism could be overblown. Earlier this year — also in Boston — investors preached caution to Harvard Business School’s PE/VC event on Asian investments, saying capital has saturated the market and too many inexperienced GPs abound.