Wednesday, February 14, 2007

VC Players Look East, to China

"Mainland China doesn't yet boast a Silicon Valley, but an influx of venture capital funding in promising new areas could put U.S. startups at a disadvantage as they compete for funds.
Venture capital players are increasingly betting on Chinese startups that supply the software, chips, and networks to feed the country's 400 million cell-phone users' voracious appetites for wireless data. That includes applications like instant-messaging, video-uploads, and mobile Web searches, along with consumer-level Web services such as social networking. The influx of funding saw a brisk increase last year—VCs bet $920.7 million on information technology companies last year, up 34% from 2005, according to a Feb. 13 study from Dow Jones (DJ) VentureOne and Ernst & Young. And that funding shift across the Pacific could pressure Silicon Valley startups to devise business models with extremely meager cost structures as a way to attract venture capital. "

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