This doesn’t happen too often, so it’s noteworthy when it does. Softbank Asia Infrastructure Fund, which makes high-tech investments with financial backing from Japan’s Softbank Corp., Cisco Systems and others, has closed its office in Silicon Valley. The move comes as SAIF finishes raising a $600 million-plus investment fund, according to VentureWire (registration req), and narrows its focus on China. Eric Hsia, who worked for SAIF out of Palo Alto, has left the firm, according to Beijing-based partner Joe Zhou.
Zhou attributed this change in strategy to the superior performance of Asian companies in the first portfolio. By comparison, 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’s also worth noting that there’s painful history here: Softbank saw many of its US investments tank during the downturn. For example, it invested $157.9 million into online grocer WebVan — some $125 million of it just before the company’s IPO in 1999, at a high price — making it one of the biggest losers when WebVan tanked.
Update: As for Cisco’s motivation, it should pretty obvious. Cisco’s John Chambers drives it home: “If I wasn’t American, I would be Chinese.” (Thanks Om)