Source: Zhidongxi

Author:Lina

This article is reproduced with permission

Highlights: The inside story of Walden International’s legendary chairman, Lip-Bu Chen: He studied for a master’s degree in nuclear energy at MIT at the age of 19, and has been promoting the shaping of China’s semiconductor industry for 20 years.

When it comes to investment in the semiconductor field, there is one company that cannot be ignored - Walden International.

Since 1993, Walden International has entered China and in the past 20 years, it has helped a large number of Chinese semiconductor startups to successfully land through venture capital, including a number of leading companies such as SMIC, GalaxyCore, and GigaDevice. It has indirectly promoted and shaped the entire Chinese semiconductor industry landscape, and its investment focus is almost unmatched.

How did Walden International create one semiconductor investment miracle after another? And how did the founder and chairman of Walden International, Lip-Bu Tan, who was born in Malaysia and showed a strong talent for mathematics and physics since childhood and studied for a master's degree in nuclear energy at MIT at the age of 19, build the investment empire of Walden International step by step? This article will reveal it to you one by one.

▲ Chen Liwu, founder and chairman of Walden International

In January 1992, Deng Xiaoping, who was in his 80s, sat on a rolling train and began his trip to the south. In less than two months, the old man visited Wuchang, Shenzhen, Shanghai and other places and delivered important speeches. Soon after, the southern tour began to sweep across China, and "Spring Story" was sung everywhere. A wave of reform and opening up was rising.

Walden International, a young venture capital firm founded in San Francisco, USA in 1987, also began to invest in China under this trend.

According to the recollections of Lip-Bu Chen, founder and chairman of Walden International, in 1993, with the recommendation of the Ministry of Finance and the State Science and Technology Commission, Walden International came to mainland China and became one of the earliest international venture capital funds to enter China. Along with it came the new foreign concept of "venture capital". Lip-Bu Chen, 59 years old this year, is still actively active in the venture capital arena as the chairman of Walden International. His experience is also quite legendary, but we will talk about it later.

In 1994, with the support of the World Bank, Walden International established the first Walden China Fund and began to invest in China. Since then, Walden has successively established offices in Beijing and Shanghai. The first batch of invested enterprises are mostly state-owned enterprises, and the most well-known one is the famous washing machine brand - Little Swan.

With the dual support of funds and policies, Little Swan introduced a full set of technologies from Japan's Panasonic Corporation, allowing the number of trouble-free operations of washing machines to reach the leading domestic advanced level. In the early 1990s, it was the first to integrate into the market economy and launched the well-known slogan "Little Swan wholeheartedly".

In the following 20 years, Walden International has actively participated in China's emerging technology startup market, with more than 60 investment projects involving billions of RMB. Among them are a number of well-known companies that we are familiar with: Sina, Skyworth, DJI, Meituan, Dangdang, Mindray, Eagle Brand Holdings... Currently, Walden International's investment targets are concentrated in communications, semiconductors, software and biochemistry, with 90% of them choosing early-stage projects.

However, what really makes Walden magical is its unremitting research and investment in the chip and semiconductor industry since its establishment more than 30 years ago. In the past 30 years, Walden International has focused on investing in the global semiconductor industry, and currently has invested in 100 semiconductor companies worldwide. Around 2002, the semiconductor sector in the Asian market rose, and Walden focused on the chip field, investing in companies including China Resources Shanghua, Ankai Technology, Zhixin Technology, and SMIC. Currently, Walden has invested in more than 30 semiconductor companies in mainland China alone, and its investment layout covers every sub-segment of the semiconductor industry: chip design, manufacturing, packaging and testing, equipment, downstream system applications... In the semiconductor field, Walden International's investment focus is almost unmatched.

It is precisely this kind of unremitting and persistent investment that has enabled Walden International to establish a strong reputation in the field of semiconductor investment, and has also led to the appearance of dazzling names such as SMIC, GalaxyCore, GigaDevice, and Amlogic Semiconductor on Walden's "Investment Honor Roll".

Walden International has achieved today's success thanks to its founder and chairman Lip-Bu Tan. Over the past 30 years, under the leadership of Lip-Bu Tan, Walden International's business has expanded rapidly around the world. Currently, its projects have spread across the United States, China, Japan, Israel, Australia, Singapore, Malaysia, India, the Philippines and other countries. The amount of VC funds managed has increased from US$3 million at the beginning to US$2 billion, more than 600 times.

At the same time, Lip-Bu Tan's own experience is also very legendary. Lip-Bu Tan's English name is Lip-Bu Tan. He was born on November 12, 1959 ( Wikipedia shows that Lip-Bu Tan's birthday is January 1, 1960 ) in Kuala Lumpur, the capital of Malaysia, and lived with his parents in Singapore since he was a child.

Chen Liwu showed his amazing talent in mathematics and physics from an early age. At the age of 16, he was admitted to Nanyang Technological University in Singapore and completed his undergraduate degree in physics in three years.

"At that time, I thought that energy was the most important issue (in the world). Inspired by the belief that 'go west, young people*', I came to the United States to study nuclear energy engineering at MIT (Massachusetts Institute of Technology)."

"'Go west, young man.'" is from an article written by John BL Soule in 1851 to encourage American youth to participate in the development of the West. It became famous because Horace Greele, the founder of the New York Tribune newspaper, frequently quoted it.

Just like that, in 1978, the 19-year-old genius boy Chen Lip-wu traveled across the ocean to the Massachusetts Institute of Technology on the east coast of the United States to begin studying nuclear energy engineering.

However, at 4 a.m. on March 28, 1979, less than a year after Chen Liwu entered school, a sharp and piercing whistle alarm sounded through the sky over Pennsylvania, USA. At that time, a meltdown occurred in the second reactor of the Three Mile Island Nuclear Power Plant built on the Susquehanna River. This accident was called the Three Mile Island nuclear accident (Three Mile Island-2), which eventually became the most serious nuclear power plant accident in U.S. history and was classified as a Level 5 nuclear accident (there are 7 levels of nuclear accidents, and the higher the level, the greater the harm).

Although the accident did not cause large-scale casualties, the Three Mile Island nuclear accident exposed the dangers of nuclear energy. The nuclear energy industry was affected and industry opportunities were greatly reduced.

At that time, although the 22-year-old Chen Lip-wu had become the chief engineer of EDS Nuclear at a young age, after obtaining a master's degree in nuclear engineering from MIT, he finally made a decision - to come to the University of San Francisco on the west coast of the United States to pursue an MBA degree in business administration.

The style of the West Coast of the United States is completely different from that of the East Coast. In this land nurtured by the culture of Silicon Valley and Hollywood, Chen Lip-wu saw more colorful possibilities. In San Francisco, Chen Lip-wu not only tried different positions in a number of companies ranging from energy to investment, but also briefly served as vice president of Chappell, a well-established British music publisher/piano manufacturer.

After six years of experience, in 1987, at the age of 28, Lip-Wu Chen officially founded Walden International in San Francisco, with an initial management fund of US$3 million, focusing on early-stage technology investment.

Although he is a typical science master, Lip-Bu Tan still has the blood of a "literary youth" flowing in his bones. "Walden International" was named after Henry David Thoreau's book Walden. Lip-Bu Tan once said that his goal is the same as Thoreau's - "Contrarian, rather than just following the trend".

In the following 30 years, in addition to serving as the chairman of Walden International, Lip-Wu Chen also served as the CEO of Cadence, an internationally renowned semiconductor electronic design automation (EDA) company, since 2009. During the investment cycle of some invested companies, Lip-Wu Chen would also join the board of directors of the invested companies as per convention, such as Sina, SMIC, Aquantia, etc.

According to a previous interview with Lip-Bu Tan, he only needs four hours of sleep a day, and generally spends 35% to 40% of his time supervising previous projects, 40% of his time looking for new projects, and the remaining 20% ​​of his time on company affairs.

Although Walden International is a venture capital firm originating from the United States, it has been very successful in Asia, with the Chinese market being the most prosperous.

In fact, investing in China is not easy. First of all, "venture capital" is a foreign concept. It is easy to encounter the problem of "oranges growing in Huaibei" when transplanted from the other side of the ocean. Chen Liwu said that there are several challenges in investing in China. The first is the exit strategy; the second is the flexibility of the management team. Many management teams do not have mature experience; the third is financial credit. Relationships are also very important. Some relationships are related to regulations.

However, in addition to being from Asia and having a common understanding of culture, Chen Lip-wu has also been engaged in investment work in Asia for the past 20 years. From China, India, Japan, to Singapore, his rich experience in numerous cross-border investment projects and his keen understanding and grasp of cutting-edge technologies enable Chen Lip-wu to be able to.

Walden International's general investment period is 10 years, and 90% of them choose early-stage projects, of which the first 4 years are the investment period and the next 6 years are the recovery period. The average time spent on the board of directors of the invested company is 8 years; the investment amount in each company is usually between US$2 million and US$10 million.

In general, semiconductors are not a "quick money" business, especially under the legendary stories of Internet companies with short-term high valuations, the light of semiconductor companies is even dimmer. As an industry that is heavy in assets, technology, and manpower, it often takes 9 to 10 years for a semiconductor company to get a return - this speed is simply too "un-Internet".

It is precisely because of these three factors that China's semiconductor industry has developed slowly over the past few decades, and venture capital institutions around the world are reluctant to invest in the semiconductor industry in recent years, and young college graduates around the world are reluctant to join semiconductor companies. Especially under the impetus of the global Internet wave, young people are more willing to flock to the Internet, social media, mobile platforms and other fields that can make money quickly.

Lip-Bu Tan once lamented, "Many venture capitalists working in semiconductors are old and retired. Young people want to find jobs that make money quickly. The semiconductor industry is too difficult, and they don't like such hard work."

However, in recent years, with the AI ​​chip boom and the ZTE incident, the whole society has begun to shift its attention to the chip and semiconductor industries, and capital and talent have begun to emerge. At present, the Chinese government has made the semiconductor industry a key development industry. The first phase of the National Integrated Circuit Industry Fund (Big Fund) launched in 2014 has an investment amount of up to 140 billion yuan, and the second phase of fundraising launched in 2018 has a target amount of up to 200 billion yuan. At the recently completed central government meeting, semiconductors were the first in the five-year plan.

China has already achieved certain results in chip design, microprocessors, packaging, etc., but in terms of memory, chip foundry, or design software like Cadence, the Chinese market is currently lagging behind by more than one or two generations.

As for the AI ​​chips that are currently popular, Chen Liwu said that he expects more AI chip/AI accelerator startups to emerge. At its peak, there were 120 Wi-Fi startups on the market, but now there are less than 50 AI chip companies on the market.

Objectively speaking, China has achieved certain results in chip design, microprocessors, packaging, etc. However, in areas such as memory, chip foundry, or design software like Cadence, the Chinese market is currently lagging behind by more than one or two generations.

Walden International's 30 years of deep investment in the semiconductor field and its many students may provide some reference for China's semiconductor industry. As the underlying technology for the development of science and technology and the "core brain" of all electronic products, semiconductors are, in a sense, the foundation for the normal operation of modern society. As a typical high-tech industry, in addition to continuous breakthroughs and innovations in technology, practitioners really need to have the spirit of "sitting on the bench for ten years" and continue to invest in cultivation in order to finally reap rewards.

"Xinshiye's media"