VC Report: Words of Wisdom from Cisco's Man in Asia

Back to Contents of Issue: June 2002

ANDY YAN, THE MAN in charge of the $1.5 billion Softbank Asia Infrastructure Fund in Hong Kong, shared his investment philosophy with us on a recent trip to Japan. The fund is a joint venture between Softbank and Cisco Systems, but Yan points out that the money comes from Cisco. Cisco's man in Asia takes a very cautious view of Japan.

"In the last 10 years, there have been some scattered investments where foreign investors made money (in Japan), but overall they are very, very few. Most of the foreign funds don't make money at all," Yan says.

So what is he looking for in Japan? "We are a venture fund, but in Japan we are interested in two types of investment. One is a buyout fund with the difference being we are willing to be a passive minority shareholder with certain management rights," he says. "The other type of business we are looking at is a smaller size IT investment at a later stage. By 'later stage' we mean the company has a track record. The focus is on a company with revenue records. We don't like to invest in companies at the seed stage. We are trying to avoid that in Japan."

Instead, Yan is looking out for good companies that have hit upon hard times. "The potentially interesting story for us is when a publicly listed company with good sales and good products runs into a liquidity problem. That could be a very interesting story from our point of view. A lot of funds are looking at the same sort of deals."

Yan is looking for good companies in specific sectors and is in no mood to rush. "Basically we are looking at three sectors: telecom, media and technology," he says. "I'm trying to not be too cute in terms of financial engineering. If you look at history, the people who made a lot of money always made very simple and direct investments. Funny equations at the end of the day always end up losing money."

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