Thomas G. Tsao’s Wisdoms for VC

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Thomas G. Tsao is a forthright and sharp investor; he graduated from Harvard University with a Bachelor’s degree in Economics and has extensive experience in investment banking, merger and acquisitions.

Before making waves in Mainland, Mr. Tsao started as an investment banker with Merrill Lynch in New York and has also worked for Dresdner Kleinwort Benson covering the TMT sectors. After shifting his focus to China, Mr. Tsao co-founded the Beijing Technology Development Fund, backed by Beijing Enterprises and Tsinghua University Enterprise Group, where he helped make investments in CommerceOne, MyRice and SiRF. The fund was the first international venture capital fund jointly established by Chinese stated owned enterprise (Beijing Enterprises Holdings Limited) and a Chinese top university (Tsinghua University).

In 2002, Mr. Tsao staked out on his own; he and Wai Kit Lau founded the Gobi Partners, a venture capital firm that mainly focuses on the A round of investment, staying ahead of the curve, and finding LP on their own.

Visitors to Tom’s office usually are impressed by the ingenious design. The Gobi office is a four-story house located in Zhang Jiang Innovation Park, away from Lujiazui, exchanging the central district’s bustle and stress for a more quiet environment where a decision could be made unhurriedly. In 2007, other investment institutions invested in the later stage of the project, and they made great money from the pre IPO in a simple and crude way. Yet even the best of times could persuade Gobi Partner to alter its philosophy.

Currently, Gobi Partner holds over 300 million dollars capital for 5 funds ; its portfolio consists of 45 projects, 9 of which have exited successfully. Mr. Tsao concentrates on the early stage investment and reviews 1,500 projects annually.

As to tricks for becoming sucessful in China, Mr. Tsao offers the following suggestions. The two biggest gains from the VC experience is to have thick skins and not be afraid of failure. In regard to China in particular, Mr. Tsao recommends providing the full package of services when investing and pay particular attention to details.

Mr. Tsao believes that the post-investment assistance is equally as important as getting into the game early. For Gobi, the first step of investment is judging the personality, technology and reaction to the market of the few founders; the second step is how to support and help the startup, especially from A round to B round.

Gobi pays great attention to the basic data like finance and legal of the companies they invest. Those strict and normative standards they set for the companies help them to deal with controversial issue easily. For example, the dispute on the merger between Visionchina TV and DMG end up with the outcome that the court dismissed the complaint Visionchina TV placed on DMG.

screenshot of GobiPartners official website