Public/Private Venture Capital Investment Partnerships

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Public/Private Venture Capital Investment Partnerships

  1. 1. Public/Private Venture Capital Investment Partnerships 2005 Guangzhou Investors Delegation May 13, 2005 John Chock, President Hawaii Strategic Development Corporation Jeffrey Au, Managing Director Pacificap Group, LLC
  2. 2. Mahalo to <ul><li>Canton Venture Capital Company </li></ul><ul><li>Canton Venture Capital Association </li></ul><ul><li>Guangzhou Municipal Board for International Investment </li></ul>
  3. 3.                                                           
  4. 4. Hawaii’s Economy <ul><li>Population: 1.25M </li></ul><ul><li>Gross State Product 2004: RMB 400B , +3.2% </li></ul><ul><li>Tourism: 7M visitors, 29% of GSP </li></ul><ul><li>Other major sectors: </li></ul><ul><ul><li>Military </li></ul></ul><ul><ul><li>Construction/Real estate </li></ul></ul><ul><ul><li>Financial services </li></ul></ul><ul><li>High Tech: 6% of economy </li></ul><ul><ul><ul><ul><li>Need to diversify! </li></ul></ul></ul></ul>
  5. 5. Hawaii’s Growth Sectors <ul><li>Life sciences </li></ul><ul><li>Dual use industries </li></ul><ul><ul><li>Remote sensing </li></ul></ul><ul><ul><li>Telecommunications </li></ul></ul><ul><li>Ocean sciences </li></ul><ul><li>Diversified agriculture </li></ul><ul><li>Renewable energy </li></ul>
  6. 6. Venture Capital in Hawaii <ul><li>State has been catalyst for vc industry </li></ul><ul><ul><li>Real estate economy: no venture capital </li></ul></ul><ul><ul><li>Indirect investment policy: fund of funds </li></ul></ul><ul><ul><li>Private sector investment management </li></ul></ul>
  7. 7. Results: 1995-present <ul><ul><li>Goals: Develop tech sector, make a profit </li></ul></ul><ul><ul><li>$16 million committed to 9 vc funds </li></ul></ul><ul><ul><li>$500M leveraging with private co-investment </li></ul></ul><ul><ul><li>60+ companies funded </li></ul></ul><ul><ul><li>2 IPOs, 4 acquisitions, 1 IPO in registration </li></ul></ul><ul><ul><li>Networks created with vc’s entrepreneurs, support groups </li></ul></ul>
  8. 8. Investment Parameters <ul><li>Market Driven ? High </li></ul><ul><li>Control High Low </li></ul><ul><li>Cost of due diligence High Low </li></ul><ul><li>Profits shared Low High </li></ul><ul><li>Exposure High Low </li></ul>Direct Inv. Indirect Inv.
  9. 9. China-Hawaii Partnership <ul><li>State business office in Beijing </li></ul><ul><li>Tech incubator relationship with Zhongguancun </li></ul><ul><li>DragonBridge Merchant Bank </li></ul><ul><ul><li>Prepare Asian companies for US market entry, fundraising, listing on US/China exchanges </li></ul></ul><ul><ul><li>Backed by banks, HSDC </li></ul></ul><ul><ul><li>Success based, not fee-based </li></ul></ul><ul><ul><li>Management team: </li></ul></ul><ul><ul><ul><li>Barry Weinman, Allegis Capital </li></ul></ul></ul><ul><ul><ul><li>Po Chi Wu, Advisor Guangzhou Municipal Gov’t, </li></ul></ul></ul><ul><ul><ul><ul><li>Allegro Capital, China Venture Management </li></ul></ul></ul></ul>
  10. 10. Recommendations <ul><li>“ Carve out” portion of portfolio for commitment to private vc funds willing to invest in GZ </li></ul><ul><ul><li>5-15% </li></ul></ul><ul><ul><li>Pool resources with other government entities </li></ul></ul><ul><ul><li>Require investment in GZ </li></ul></ul><ul><ul><li>Allow some of the funds to be invested outside GZ to allow for syndication </li></ul></ul>
  11. 11. Back-up Information
  12. 12. Investor B Investor A Govt. Limited Partnership Company 2 Company 1 Company 3 VENTURE CAPITAL LIMITED PARTNERSHIP STRUCTURE General Partner Limited partners Portfolio companies
  13. 13. Investor B Investor A Govt. Limited Partnership Company 2 Company 1 Company 3 VENTURE CAPITAL LIMITED PARTNERSHIP STRUCTURE $ $ $ General Partner MGT. FEE Limited partners Portfolio companies
  14. 14. Investor B Investor A Govt. Limited Partnership Company 2 Company 1 Company 3 VENTURE CAPITAL LIMITED PARTNERSHIP STRUCTURE $ $ $ General Partner MGT. FEE Limited partners Portfolio companies
  15. 15. Investor B Investor A Govt. Limited Partnership Company 2 Company 1 Company 3 VENTURE CAPITAL LIMITED PARTNERSHIP STRUCTURE $ EQUITY $ EQUITY $ EQUITY General Partner MGT. FEE Limited partners Portfolio companies
  16. 16. Investor B Investor A Govt. Limited Partnership Company 2 Company 1 Company 3 VENTURE CAPITAL LIMITED PARTNERSHIP STRUCTURE IPO $$$$$ $$$ ROI $$$ ROI $$$ ROI EQUITY General Partner MGT. FEE/ROI $ $ Limited partners Portfolio companies
  17. 17. Investor B Investor A Govt. Fund of Funds (LP or LLC) Venture Fund 2 Venture Fund 1 Venture Fund 3 VENTURE CAPITAL FUND OF FUNDS STRUCTURE GP/Mgr. Portfolio Companies Co. A Co. B Co. C Co. D

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