Asia gives Silicon Valley the blues
Well, the Chinese authorities can heave a sigh of relief: not only is the cash flooding in but Silicon Valley, the watchword for innovation, investment and success is on its knees.
Well, not quite, but a report of mind-numbingly detailed statistics from the Silicon Valley Community Foundation, strongly hinted that rising competition from Asia, especially India, China and South Korea threatened its dominance as the world’s innovation hub.
The survey by Joint Venture, “Index of Silicon Valley 2010” said the rise of these countries, along with California’s constraining rules was “draining the lifeblood of funding and foreign talent from Silicon Valley.”
And the figures don’t look good. Financing through venture capital fell 37 percent from 2008 to 2009. Even investment in clean technology dropped to $1.2 billion in 2009, down from $1.9 billion just when the report concluded that investment was shifting from software and semiconductors towards biotechnology and energy, among others.
Most startling was the number that said 60 percent of Silicon Valley’s science and engineering workforce was born outside of the United States, with most of those from India, China and South Korea.
And as if to prove just how green and advanced Asia’s companies, there was a minor piece of news that fanfares China’s global green credentials.
Yingli Green Energy, the solar panel company, announced it had signed a sponsorship deal with world football’s governing body FIFA. Yingli proudly pointed out it was the first renewable energy company to sponsor the World Cup and the first Chinese company to seal a global sponsorship deal with FIFA. Apart from cash, for which FIFA is desperate, Yingli will also supply solar cells to sites holding the World Cup.
So just as the sun is beginning to set on California’s home of research, the latest investment figures show Asia stealing the show too. Figures on private equity investment from data provider Dealogic for January showed that Asia-Pacific’s share of investment fund raising, more than doubled from a year ago. It concluded that buyout firms are capitalising on India and China’s economic recovery, much of it directed to cleantech projects.
So far this year firms have announced deals worth $1.2 billion, representing 22 percent of the $5.5 billion-worth of global deals. Last year, deal value for Asia over the same period amounted to only 9 percent of the global market.
Interestingly the money isn’t all going one-way. While foreign firms are desperate to get into Asia’s ‘burgeoning’ consumer, green tech and energy markets, sovereign wealth funds have been busy outside of their domestic areas. Indeed, earlier this month details emerged of China Investment Corp, a sovereign wealth fund, finalising a deal with Apax Partners.
The deal, worth €685 million, goes into the company’s €11.2 billion Apax Europe VII fund started in 2007. The deals is a complex refinancing and investment deal including covering management fees into one of the largest buy-out funds in Europe, which has invested about half its cash.
The deal also gave CIC a 2.3 percent stake in Apax Partners, the management company. It’s a more cautious move into private equity companies since its $3 billion purchase of 10 percent of Blackstone prior to its flotation and catastrophic subsequent collapse of share price.
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