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June 18, 2005

Softbank moves out of SV

[Via Silicon Beat] Soft Bank putting up a "we have moved sign" and moving their base to China. Their rationale -

U.S. deals are too risky - early stage and expensive to fund, not to mention technology-heavy. "Let's say I put $10 million in a U.S. company - it probably lasts 18 months," said Zhou, "and when I do that it's probably not even profitable. In China, chances are that when we do the $10 million deal the company's profitable and [the funding's] going to last a long time." India, Korea, Hong Kong and Taiwan are also places SAIF will invest

It takes courage to avoid the Silicon Valley charm. Though if you work through your spreadsheet then its a no-brainer  to not have any expensive early stage here.  Apply all the Carr philosophy,  speed to market pressures, barrier to entry,  time to copy jitters, high sales cost etc and you get a decent enough logic to move out of the bay area deal flow.  Significant dollar amount will go out,  will get invested elsewhere and help grow the phenomena of start-ups serving global markets.

Though we are hoping those companies will continue to feed Bay Area economy by having their HQ here !

June 18, 2005 in Silicon Valley | Permalink

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