The meeting was conducted February 19th 2009.
The names of the companies involved are changed but are known to the students.
VCX - First meeting
GeneralMajority of people have an engineering and financial background.
Deal flow: IT - 1000pr year. - close 4-5pr year. They would rather invest in a few companies over several rounds than have a relative larger portfolio.
Network and relationships with other funds, universities and other institutions is very important in the investment strategy. Often you get potential projects from these.
Good track record. The team has a long history, which is a major asset.
LPs
Main partner is a subsidiary of a National bank, others include private equity institutions, insurance, banks - not so much commercial.
ChinaThey are very competitive in China as they are the only EU-based company with a subsidiary in China. This has a positive diversification effect on the overall portfolio and a positive effect on the companies engaged with VCX as they can get a relative easier access to the Chinese market.
They are mostly interested in early stage investments, which make them eager to join in a co-investment to diversify the risk. This is especially true for China where the roles and ways of conduct are much different from the West.
The Chinese operation consists of a partnership with "Chinese partner company", an operator with a impressive track record. The VCX office in China consists of a general partner with experience in the Chinese market and an excellent (and very important) Chinese network.
The Chinese partnership is going very well and two deals have been made with an agricultural equipments manufacturer and a company does browsers for mobile phones.
The arrangement with the "Chinese partner company" is such that if VCX (or the "Chinese partner company") wishes to co-invest with another VC, they are allowed to do so (if either denies doing so)
There are good prospects for China as it still consists of 'early' consumers. Many have yet to join the middle class, a segment which is expected to experience significant growth in the future and which is a segment with a relative large focus on consumption (and not on the environment).
The Chinese market seems to be less effected by the current crises as GDP is still going strong (we could verify this).
Fundraising
Mostly French money in the Chinese Fund, which meant that there was no need to get 'Chinese money'. The fundraising process usually takes one year.
Luckily for VCX, fundraising will not be needed until 2010. This is not the case for many of the other players in the VC industry and many have large problems. (No M&A in the industry because of the Crisis yet).
IndiaThere is a woman on the team with knowledge of India but China was chosen as the possibilities seemed more prosperous. Besides China and India no country were considered.
Location of the dealsAbout 50% of the deals are French, almost all inside Europe. Have just closed an American deal (the company used to the French but moved to The US because of the potential). They also have a deal in Russia, which they see as a very interesting market - seems to the 5 years behind Europe, which opens for a possibility for a 'cheap' expansion (and there is a French person in the management). She does not know of anybody starting an office in Russia, only projects.
