Venture Capital in Asia

Venture capital is broadly acknowledged as being an important constituent of a mature habitat for high-technology entrepreneurship as practiced in Silicon Valley (Lee et al. 2000). Each chapter in this book has examined the significance of venture capital in the economies of the regions under discussion and its particular place in the regional habitats for innovation that have appeared. As with other institutions, in each habitat the venture capital industries have differing operational characteristics, different relative mixes of national and international venture capital participation, and different investment patterns and targets. When considering and comparing these nations, it is useful to have one ideal-typical case to use as a standard of comparison. For this reason and because reproducing the Silicon Valley experience is the goal of many economic planners in Asia and around the world, this chapter uses Silicon Valley as the template for comparing the other venture capital industries. The venture capital industries of six nations examined in this book China, India, Japan, Korea, Singapore, and Taiwan—share certain resemblances and significant differences. As we shall show, the national industries differ on a number of dimensions, one of which, the direct relationships to Silicon Valley, we shall highlight in our discussion of Transpacific connections. The development of venture capital in each nation was evolutionary and had path-dependent characteristics.' Further, this chapter argues that, though venture capital can provide a catalytic function for the growth of a hightechnology habitat, this catalysis is not automatic. As with any transplanted institution, venture capital can contribute to transforming its environment, but, conversely, it can be transformed by the environment to the point at which it no longer resembles the institution in its original environment. In Asia, both onto those pract