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  the Software View: Above the (Pacific) Rim. The land of the rising Sun. (Part I)

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Now, dear readers, on with this week's episode of the Software View!

AsiaTech Ventures, Limited, one of Hong Kong's leading venture capital firms specializing in the Internet and telecommunication industries, announced the launch of a $375 million (Hong Kong dollars) Asian Java Fund investing in Internet companies using Sun Microsystems, Incorporated's Java software technology platform in Asia.

Investors in the Asian Java Fund include Sun Microsystems, Japan's Fujitsu Limited, NTT DoCoMo, Japanese trading company Mitsui and Company Limited, venture capital firm Nomura/JAFCO Investment (Asia) (NJI), Hong Kong's Pacific Century CyberWorks, and property developer Sun Hung Kai Properties Limited. Other investors in the fund are two Asian telecommunication providers (Singapore Telecommunications Limited and Cable and Wireless Hong Kong Telecom), the National Computer Board of Singapore, NTT Mobile Communications Network Incorporated and the Singapore government's Telecommunications and Technopreneurship Investment Fund of Singapore (TIF).

Java is a software technology platform invented at Sun Microsystems and created by Doctor James A. Gosling. It consists of not only the Java programming language itself, but also of the Java virtual machine and its associated core Java Class files and applications programming interfaces, or API's.

Java has the potential of becoming the de facto programming language for the Internet and the World Wide Web, and the standard for cross-platform executable content. Its mantra is "Write once, run anywhere". Java annihilates the switching costs associated with portability between operating systems and computing platforms for software applications without rewriting the applications every time. Applications that use the Java software technology platform for Internet connectivity include smart cards, cellular phones, automobiles, televisions, cable set-top boxes, and computer appliances.

AsiaTech co-founder and executive director James Yao said the fund was expected to review three thousand to five thousand proposals and business plans over the seven-years life of the Asian Java Fund, and the fund would probably invest in fifteen to twenty-five companies. The Asian Java Venture Fund will invest in emerging companies which are "Java technology-centric". "The industry expertise, knowledge base and global reach of the investors will be critical to the success stories of Asian Java Fund companies," said Sun Microsystems president Edward Zander. Besides providing financial aid and start-up capital, the Asian Java Venture Fund would help start-ups by playing an active role in enhancing management capabilities, marketing, distribution, technical, and operational consultancy services.

"The fund is unique not only because it brings together such a diverse range of investors but because, for many of them, it is the first time they have participated in a third party fund outside of their own private investments," said Yao. The fund would invest in three main categories of companies: comprising firms in the information appliances market, consumer-oriented content-based companies particularly in Greater China and in Japan, and companies in business-to-business electronic commerce applications. AsiaTech Executive director Hanson Cheah said the fund would take a ten to forty percent ownership stake of any company to be invested in and would aim for an investment return of thirty to forty percent per annum.

"Putting together such a powerful group of investors is substantial in the Asian Pacific region," said Jonathan Schwartz, vice president of Sun Microsystems' Equity Investment Portfolio. "The industry expertise, knowledge base and global reach of the investors, coupled with Sun's technology skills and the National Computer Board's local contacts, will be critical to the success stories of the Asian Java Fund's companies."

"The Asian Java Fund is designed to stimulate knowledge-based economies in Singapore and in the region," said Michael Yap, chief executive of the National Computer Board. "And the fund is testimony to Singapore's efforts to encourage local technopreneurs to develop innovative ideas without being constrained by the burden of financing. While the fund is based in Singapore, it will also allow for investments in other Asian countries. We believe that this approach will enhance Singapore's role as a regional technology, electronic commerce, and financial hub."

GO EAST, YOUNG MAN

The number of Internet online users in the Asia Pacific region outside of Japan will be around 21.8 million by the end of 1999, spending over $2.2 billion United States dollars, according to the International Data Corporation (IDC). Internet research manager for IDC Asia Pacific, Pete Hitchen, said the forecast only includes users who spend more than ten hours per week online and discounts double usage at work and in the home. The market research firm said business, retail and educational use were fueling growth, adding that more Internet content suppliers and foreign entry in Asia had bolstered expansion. The IDC report predicted that the compound annual growth rate of Internet users from the Asian Pacific region (excluding Japan, which is already the second-largest Internet economy in the world) for 1997 to the year 2003 would rise to fifty-six percent. The research firm pegged the number of regional Internet users at 95.2 million by the end of 2003, generating $87.5 billion annually in online revenues. "This Internet boom in the Asia/Pacific region highlights the potential of doing business online. Internet businesses, retailers, web sellers and government bodies should take note of this rapidly evolving market," emphasized Hitchen.

ON THE CUSP OF THE PACIFIC CENTURY

Dan Gillmor writes that, "Asian businessmen want to lead the way to the new era. There has been 'tremendous change' in the local economic climate in recent months, not just as a result of Asia's ongoing recovery from the financial crisis that began in mid-1997. There's also been a sharp rise in the number of people who have quit large companies to start smaller ones. Is the twenty-first century destined to be ruled by the Asian powers? That shift is, in many ways, a generational one. The agreement between the United States and China could bring the world's most populous nation into the World Trade Organization. The economic liberalization taking place in China would be good for Hong Kong as well as the mainland.

Good timing isn't everything, but it definitely beats the alternative. Just ask Hanson Cheah and James Yao, co-founders of AsiaTech Ventures, Limited.

They had a smart idea a couple of years ago - to set up a technology investment fund that would span the Pacific region, based in Hong Kong and Silicon Valley. They'd find Internet and communications companies that had a chance to do business in the global marketplace, with an emphasis on the vast Asian Pacific region.

The partners had a chance to invest in a Silicon Valley-based Internet company, which gave them a deadline. To meet it, Cheah and Yao had to close out the money-raising for a fund that became known as Asia Technology 1.

They were lucky. In July 1997, only a month after they closed the fund, the worst financial crisis in recent years began rippling through Asia. Had they waited, their investors might well have gotten cold feet and pulled out.

Two years and four funds later, they and their investors are surely thankful for their timing. AsiaTech Ventures is a star in its field, with strong returns on investments and the kind of local clout that brings the best entrepreneurs and deals into the door. Cheah, Yao, and their associates are enjoying a rare kind of limelight.

As has already been stated, in its most recent coup, AsiaTech was named to manage the fledgling Asian Java Fund, a regional clone of the enormously successful Silicon Valley fund run by Kleiner Perkins Caufield & Byers. That's on top of Asia Technology funds 1 and 2 plus a major piece of the Hong Kong Applied Research Fund, sponsored by the Hong Kong government in its continuing effort to jump-start technology investments. Besides California and Hong Kong, they have offices in Taipei and Singapore, and are moving into Beijing as well.

It's heady stuff for a small firm whose founders haven't reached their thirty-fifth birthdays yet. Cheah, thirty-four years old, is a native of Malaysia. Yao, thirty-two years old, was born in Taiwan and raised in the United States. The two first met when they both attended the Massachusetts Institute of Technology in the late 1980's.

Each went to work in the technology business, and both were sent by their respective companies to work in Asia. They reconnected in Hong Kong, where Cheah was working for a private equity firm and Yao had signed on with a company that put together networks for other companies.

To be continued ...

Sincerely,
Mark Kuharich

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