SEQUOIA Capital, a US-based venture capital firm, said yesterday it has invested an initial US$4 million in 51.com, a Shanghai-based Website that claims to be a Chinese-language version of the popular Myspace Internet community.

The local Website, which has 10 million members, most of whom are age 20 to 22, has created an online platform that allows users to upload pictures and diaries. The Website company plans to list on Nasdaq within three to five years, according to Pang Shengdong, 51.com's chairman and chief executive.

"We are confident of the Myspace model, and we are seeking more opportunities in the Chinese Internet industry," Neil Shen, founder of Sequoia Capital China, told a news conference yesterday. "It is a long-term investment.

Sequoia Capital, which launched a US$200 million investment fund in China last year and in the past has channeled funds into Google and Cisco, will invest a total 150 million yuan (US$18.75 million) in 51.com, industry sources said on condition of anonymity. But partners to the deal declined to comment on the issue or divulge 51.com's share structure after yesterday's investment announcement.

Landmark IPOs such as those made by search engine Baidu and record-shattering acquisitions have attracted venture capital firms to China's high-tech sector.

On August 5, 2005, shares of Baidu, a Chinese search engine that models itself on Google Inc, surged almost fivefold in the first trading day after its initial public offering.

Baidu.com raised US$109 million, 40 percent more than it initially sought.

In 2005, venture capitalists invested a total US$1.06 billion in China, 60 percent of which went into Internet-related firms, according to Beijing-based Zero2IPO Ltd, which provides venture capital information on the country.

Before the 51.com deal, Sequoia Capital China invested in online gourmet guide dianping.com and entertainment information provider qihoo.com.

Other venture capital firms, including IDG and Granite Global Ventures, have invested in electronic magazines, blog providers and automobile information Websites in China.

 

(Source: Shanghai Daily, Zhu Shenshen, 2006-05-17)