Global Alliance - Technology Ventures between US and Asia Pacific

CIE-SEA Fall Conference, Sept. 23, 2001

Ronald Chwang, Acer Technology Ventures, AmericaChairman & President

Elements leads to Venture Success

• IdeaBetter faster cheaper; Brave new world

• TalentVision, execution, experience

• MarketCustomer demand, value proposition

• CapitalSelf-generated profit; external investment

• Bond by a common interest - return for all stack holders

Cross Pacific Venture Model - North America focused

Market

Stockexchange

North AmericaAsia Pacific

Idea

Talent

Investment

Talent

Investment

Cross Pacific Venture Model - Asia Pacific focused

Market

North AmericaAsia Pacific

Stockexchange

Market

Idea

Talent

Investment

Talent

Successful Examples

• Semiconductor Industry (Taiwan /US)Wafer FoundryAssembly & testingFabless Chip Design Companies

• Software Industry (India /US)Programming outsourcingIT consulting and servicesApplication development & remote support

Recent factors driving new venture models• Internet & Communication

InfrastructureEnable better global product & business collaboration

• Growing number of Asian EntrepreneursIdeas and talent

• Opening of China domestic marketPotential for self-sustaining growth

• Availability of Asian based venture capitalMore knowledgeable on Cross-Pacific investment

Cross Pacific Venture Model - New evolving model

Idea

Market

Stockexchange

North AmericaAsia Pacific

Stockexchange

Talent

Investment

Idea

Talent

Investment

Market

Acer Technology Ventures

• Acer Group venture investment arm since 1997

• Structured as an independent professional venture fund management company

• Funds under management: - ATVF - $40 million (100% Acer) - IP Fund One (May, 2000) - $260 million

(40% Acer/60% institutions)

• Active value-added investment style

TaipeiTaipei

Shanghai Shanghai

Singapore Singapore

• Greater China, India, & Singapore• Leading edge manufacturing• System integration• Service & channel infrastructure• Expansion stage

Asia Pacific Focus

Silicon ValleySilicon Valley

• US & Canada• Technology innovation• Hardware, Software IP& product• Leading edge Service infrastructure• Early stage

North America Focus

Cross Pacific Value add

Acer Technology Ventures

The Greater China Opportunity• It is not an over-night sudden

phenomenon• Well orchestrated, staged, progressive

and effective opening up• Challenges and uncertainty abound• Three driving factors :

– Availability of human resources– Potential of huge domestic market– Embracing the Global community : WTO,

Olympics 2008

The Year 2000, a Watershed Year• China replaces Taiwan as the world’s

third largest hi-tech hardware supplier.

• Taiwan players contribute more than half of China outputs

• Taiwan hi-tech manufacturers intensified the offshore movement. The first time over 50% was made overseas.

• Over 30% of Taiwan companies’ manufacturing is based in Mainland.

China-bound Investment from Taiwan• The PULL

Huge potential local market Abundant resources (labor, land, engineer,….) WTO and China’s opening up Follow the supply-chain foot-step

• The PUSH

Taiwan’s uncertain macro-economy outlook Cost and efficiency of the business environment MNC customers’ urge to move forward Potential exit for excessive funds

Venture investment in Taiwan• High-tech and global business focus• Successful venture investment

practice• Well accepted entrepreneur

incentive system• Matured corporate governance and

SEC regulatory control• High Liquidity stock market

China Challenges: Entrepreneur maturity

• Vision does not equal to Execution• Separation of management and

ownership• Corporate governance and

transparency• Building solid business vs. making

deals• Technology focus vs. Customer focus

China Challenges: Market and business risks• Government policy can influence

economic decision• WTO accession - not an overnight

panacea to China problems• Fragmented markets• People Centric / Guanxi• Respect and protection of IP

China Challenges: Return on Investment• Legal, judicial and commercial

support infrastructure• Professional private venture

practices• Regulatory constrains and

interpretation variance• Sound and clear investment exit

path for foreign investments

Venture opportunities in Greater China

• Wireless technology and applications• Photonic industry• Seamless heterogeneous

telecommunication infrastructure solution

• Software OEM/outsourcing and remote support

• Biotech and healthcare

摸着石头过河Feeling the stone while crossing the river

Focus, determination, and perseverance!

Together, we shall steer through the rough sea!