Profile... An eye for a good buy and a pocket full of cash

Bao Bean is keen to make himself visible, and with good reason. Because he has money to spend — US$105 million to be exact — as part of a new five-man venture capital fund that is being backed by Softbank, Cisco and, his previous employers, Deutsche Bank. And the former research analyst is looking to bet big on media plays, particularly those that are emerging from continued convergence of distribution and content.

“We’re trying to help companies go regional or even global,” explains Bao Bean. “Instead of an entrepreneur having a great idea then making those dumb mistakes, we are trying to help them along.”
Bao Bean’s increasing profile within the industry is a sign of how tech-fuelled private equity is transforming the media landscape. Focus Media, which Bao Bean describes as the “best example”, kickstarted its own growth via a five per cent stake from Softbank, while the likes of Sohu, Sina and Baidu have all benefited from venture capital funding.

Bao Bean is clearly looking to unearth the next gem, but remains unperturbed about the differing cultures that drive the financial and media industries.

“The guys with the technology backgrounds eat, breathe and sleep funding,” he notes. “But the traditional media guys are generally shocked at what VCs and private equity investors want and what they require. I wouldn’t say there’s a huge culture clash — at least, since the iPod came out and media people figured out how to use the stupid thing.”

Regardless, Bao Bean is well aware of the image of the VC guy as a “slick geek”, even if he is not your typical financial analyst. For one thing, he appears refreshingly under-caffeinated; for another, his evident poise during the photoshoot hints at a short-lived modeling stint in Taiwan, about “30 pounds ago”. Ultimately, though, he is keenly aware of the promise of new media, and — as at least one industry source points out — has the pedigree to pick out the right companies. “He’s always been pretty much right about the companies he covered,” says the source. “He’s an analyst so he has the right background, rather than a ‘venture hobbyist’. But his expertise is China — how do you know the whole of Asia?”

This last comment may yet prove important, given the new fund’s claim to be the only regional entity of its kind. Bao Bean has teamed up with four other people — covering everywhere from India to China to Southeast Asia — although a baffling detour into analyst-speak to describe the “valuation arbitrage” edge that this offers does not make things much clearer. Nevertheless, Bao Bean appears fairly confident of his chances, even if the current paucity of similar funds is unlikely to persist for much longer.

It is, to put it lightly, a time of growth in this space — with some observers likening the situation to the infamous dotcom bubble that burst at the turn of the millennium. Bao Bean admits that “there are pockets of irrational behaviour, especially among private equity and venture investors such as myself, but I do not believe we are in a bubble along the lines of the late ’90s and early 2000s”.

Instead, Bao Bean makes the case that many of the relevant new media players, particularly in China, are actually undervalued. “That’s why they are selling out as quickly as possible,” he notes. Neither is he overly impressed by the acquisitions that have been made by holding companies, pointing out rather sagely that integrating agencies is not always easy.

“The problem with agencies is that agency heads probably don’t get along too well,” he notes, a comment that could only come from someone with an outsider’s perspective. Bao Bean’s work has brought him into greater contact with the agency world and, and while he doesn’t totally dismiss their potential as acquisition targets, you get the impression that he is not totally enamoured by the traditional agency model.

“I wouldn’t give them a second thought,” he clarifies. “Low-margin, labour-intensive commodity stuff that’s not scaleable.”

It is a memorable insight that, after a brief pause, he modifies to make clear that, at the very least, creative agency output is not commoditised.

Clearly, it is the media side that is exerting a much stronger pull on the likes of Bao Bean. And neither is he particularly picky, apart from an evident antipathy towards print. “You go where the money is, the big bucks,” he muses. “But it’s tough to get rich being a VC.”

Bao Bean's CV... 

2007 Partner, Softbank China and India Holdings

2002 Vice-president, Deutsche Bank Securities

2000 Vice-president, Banc of America Securities

1997 Associate, Bear Stearns

1996 Associate, National/Sinopac Securities