Is the IPO party over? [Disrupt Beijing Live Blog]

#15:30: This next session is called “Is the IPO party over?” and it’s a big panel. Deng Feng (NLVC), Steve Ji (Sequoia Capital), Rocky Lee (Cadwalader), Hugo Shong (Accel – IDG), Hans Tung (Qiming Ventures).

#15:31: Sarah Lacy says that “Cadwalader” is “an awful name.” I have to agree. I keep typing it wrong myself.

#15:34: Is there a bubble, and why is the IPO market so bad for Chinese companies? Deng Feng says there is a bubble in some areas, but for VCs, they don’t care if there is a bubble today, they’re more worried about what will be happening five years down the road. Even when the market is down sometimes it’s good to IPO.

#15:35: Steve Ji saying that in China, IPO doesn’t necessarily prove your success. Lots of companies have IPOed before really proving themselves. Just proves there’s a market but just may be beginning the fight. Examples: Groupon, Youku, Tudou, etc.

#15:37: Hans Tung: In the US there’s one Apple, but in China you can make a lot of money on a number of great companies. But there’s a bubble for companies that have a lot of money but they don’t know what to really do with it.

#15:40: Hugo Shong: There’s not an early-stage bubble, but there’s a bubble in terms of IPOs. But in tech sectors, China is still a great place to make early-stage investment, especially in the consumer internet and mobile sectors. Chinese VCs doing better than their US counterparts: “Not because we’re smarter than them; I think because we’re luckier than them.” And it helps they don’t need to reach outside of China to generate revenue, but most US companies do.

#15:43: Rocky Lee: In China, people tend to invest in later-stage companies than in SV. In SV you might invest in a tiny two-or-three person team and a concept, but in China the competition is so fierce that investors want to invest in start-ups with a bit more of a track record. “A lot of investors come here thinking I should compare it to the Valley, but it’s not always an easy comparison.”

#15:49: Rocky Lee also notes there are different worries in China. For example, censorship of content. Hugo Shong says he thinks the tech market in China is better, more dynamic and more innovative, because many in the US are making products to sell to the government of the US, because of the wars in Iraq, etc. Sarah Lacy notes that you don’t often hear people say China is more innovative than the US.

#15:52: Sarah Lacy: The biggest criticism of China entrepreneurs is that there’s copycats. One of the criticisms from Chinese entrepreneurs is that VCs won’t fund new ideas, they want to fund established ideas. How do the VCs respond? “It’s changing!” Hugo Shong: The whole first-generation of China tech was copycats, and it was the first round of tech investment for them as well. But now it’s changing, particularly in the mobile internet space. Shong says he sees a lot of creative new ideas happening there.

#15:53: Hans Tung: Also, for companies that IPO in the US, they have to be able to explain to US investors what they are. It’s easiest to explain as “the X of China” than have to try to say something new. But now there are lots of newer examples of innovation in China. He cites Vancl as an example of one that’s taking an established idea, but executing in a new and innovative way.

#15:55: Lacy asks, doesn’t the US preference for funding smaller, newer teams with crazy ideas lead to more innovation, though? Hans Tung says maybe but that’s why so many VCs in China are making money. Sarah Lacy: “Come on,” you’re supposed to be taking risks! “You’re not paid to be a bank manager, you’re paid to take risks.” Tung says there’s risk enough in China from government intervention, etc. “It’s risky in China, period.” So they still prefer to invest in mostly established companies and more established ideas.

#15:56: Deng Feng: The highest risk in China is to people, so that’s their real worry.

#15:58: Note: when Lacy challenged the VCs on copycats and not taking risks, she got a big response from the crowd.

#15:59: And that’s it for this session. Ten minute break now, then we’ll be back with the next session, which is Founders’ Stories with David Li of YY.com