Online Extra: Q&A With Lip-Bu Tan

The Asian venture capitalist on the lonely early days of tech investing and the excitement now

Malaysian-born Lip-Bu Tan is founder and chairman of Walden International, a San Francisco-based venture-capital firm with an extensive range of investments in Asia. A graduate of the Massachusetts Institute of Technology, Tan trained as a nuclear engineer before starting a career in finance.

He recently spoke to BusinessWeek's Bruce Einhorn about the VC field in Asia. Following are edited excerpts of their conversation:

Q: What are some of your biggest hits?

A:

I started investing in Asia in 1989, helping companies from Asia become global companies. In 1990 I invested in Creative Technology (CREAF ) in Singapore. I invested in Unisem, which became one of the largest packaging companies in Malaysia. In Taiwan, I invested in Umax, the second-largest [maker] in the world of scanners. Not too long ago, I backed [Chinese Internet portal] Sina (SINA ). Recently I backed [Shanghai-based chipmaker] Semiconductor Manufacturing International Corp. (SMI ).

Q: You're a nuclear engineer. How did you get started in venture capital?

A:

I had finished my masters degree in nuclear engineering, but after Three Mile Island I had to cancel my PhD program. I came to San Francisco, finished an MBA at the University of San Francisco and tried investment banking for a while before I came to VC.

Q: Back then, were a lot of venture capitalists interested in Asian technology?

A:

When we got started we were kind of lonely. It was very hard to find co-investors that shared our vision to invest in the early stage of technology companies. We were pretty much on our own. Most of the venture firms in Asia were either in [lowly] specialized [fields], consumer products with a nontech focus.

Q: What's it like now?

A:

There's a lot more excitement, and, of course, a little bit more competition. There's more competition in terms of the later stage. But we're [focused on the] early stage, and there it's still quite lonely. There's a little bit more [interest] now.

Q: What's compelling about Asia from an investor's point of view?

A:

The market has become very global. In cell phones, China is No. 1. In the Internet, China is No. 2 and five years from now will be No. 1. There's a lot of talent in China, India, and Singapore. It has become very exciting for me. All of my hard work is starting to take off.

Q: How did you get the name Walden?

A:

It's related to Thoreau. I wanted to do contrarian investment, rather than just rushing and following the trend. Also, I had been to the pond. It was very quiet, very peaceful for you to think through the issues. It was very helpful.

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