Go global, regardless if the company is big or small.

His strong belief in the micro-multinational business model is one reason why Promod Haque is in China.

The world's leading venture capitalist's investment logic is unique and impeccable.

"Business is global. Other than focusing on the Chinese market, we go global from day one," said Haque, who last year topped Forbes magazine's annual Midas list of the world's tope 100 venture capitalists.

In the past six months, Haque has visited China twice. He has been exploring "hybrid" investment opportunities in the country.

US investors have traditionally focused on Chinese companies that only sell in China. Haque believes it is now time to create more hybrid companies in China.

The new investment concept is very different from what was popular six or seven years ago, when a start-up company was normally registered and headquartered in the United States.

After three or four years of smooth operations in the United States, the company would then make its foray into the European market, and then Japan.

Today, Haque rarely looks at investing in new private companies unless they have some form of operations overseas and are taking a multinational approach to business.

"It is time to change, now," Haque said. "Our goal is to build micro-multinationals from day one, whose products are not only for the Chinese market, but also for the global market."

Haque, managing partner of Norwest Venture Partners (NVP), a leading US-based venture capital firm, said his company has made several early stage investments in companies that leverage India and Israel as key research and development centres.

He said he expects to achieve in China what he has accomplished in India and Isreal.

"The Chinese economy is real, since it has the largest market in the world. This is the real domain for the next-generation buzz in software and systems area," Haque said.

"What happened in India a year ago is similarly happening in China, where IT functions are outsourced out of the United States and Europe."

Some NVP portfolio companies, he said, are already using China as a location for their strategic product development efforts.

For instance, SPSS Inc, an NVP portfolio company headquartered in Chicago, found China to have the largest, and most diverse, talent pool in Asia. The company set up an offshore development centre in Xi'an, capital of Shaanxi Province, last July.

NVP was founded in 1961. It has founded 350 companies. Currently, it manages more than US$1.8 billion in venture capital.

Haque aims to start such companies, which would set up presences in China, India and the United States.

"I believe this is a more effective form of global operation. In the long term, the companies in the United States and Europe will rely on China and India," he said.

"By creating more micro-multinationals, they depend on each other. It will bridge the cultural gaps and political gaps."

Management is key

Haque said choosing the right form of management is critical for venture capitalists.

"The management team eventually makes a company different," he said.

"The investors select the right ones and pick what they want, but it is the management team that makes the difference. So, the question is, can you pick the right team and drive the team?"

Haque said he cannot simply trust a management team with only PowerPoint blueprints.

"You have to know what decides the market. What is the problem? How many people are involved? Is it a large market or a small market?

"After getting those answers, we want to look at the uniqueness of your solution. If it's obvious, everyone can do it and there's no need doing it," he said

Hierarchy distinguishes one venture capitalist from another. That means a good investor has to be an early bird. "We can't be the fifth company showing up to do the same thing," Haque said.

Life has returned to normal since the dotcom debacle. Tech is becoming sexy again.

Looking back, Haque said honestly that, as a venture capitalist, he makes mistakes all the time - different kinds of mistakes.

A common one is there's no market or no value proposition to the customers. Another is it is the right product, but it's too early in the market and customers may need it in future. That was very apparent in the last four years in China and the United States during the IT buzz and the recession.

It may also be the right product at the right time, but the former technologists don't want to give up control, so the company doesn't have the right CEO and CIO.

"Fortunately, we didn't do a lot of companies (when the dotcom bubbles burst). Only four to five. We lost some money, but not huge," Haque said.

Risks are always there for venture capitalists, he added. But judgment is an art rather than a science. "That's why we have partnerships. We look at things collectively. Together we make decisions."

Haque has worked all the way up the roll. In Midas 2002, he was ranked 15; in Midas 2003, he was No 2. He was not exhilarated by his climb to the top, but he was grateful.

He regards his first loan US$4,000 from his father to pursue a master's degree in the United States as his first experience with "venture capital." That proved to be "very good investment."

Today, there is an overwhelming number of Indian, Chinese and Israeli entrepreneurs in the United States. Haque, an Indian native, is among them.

"It's a self-selection process. They are, by nature, entrepreneurs. They are at risk when they leave their country. They left their homeland, their families, and their work to go to an unknown land, and establish companies," Haque said.

"By definition, they are risk takers. They are, by nature, adventurers. It's by definition entrepreneur-spirit, entrepreneur-genes."

Haque still works more than 10 hours a day, but work is not his only goal.

"Besides being a venture capitalist, I'm also a father, a husband. I try to be a balanced person, and be professional in every way," he said.

(China Daily 03/14/2005 page1)