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Agave Partners and China Electronic Corporation signed a memorandum of Understanding for launching Agave Partners Funds, a multi-corporate Venture Fund.

October 2017

CEC Corporate Venture and Agave Partners are creating a line of cross border multi-Corporate Venture Funds under the brand name Agave Partners Funds. The purpose of these funds is to invest in the core technologies supporting the most disruptive innovations in transportation, manufacturing, robotics, artificial intelligence and a variety of other industrial applications. Such technologies ranging from new materials, high performance processing, high performance energy storage, sensors, man-machine interfaces and interactions, high-speed secured connections.

The purpose is also to foster the global development of these technologies in allying to the Funds a selected group of large industrial corporations having an explicit interest in the selected technologies in their own application domains.

Sponsors:

China Electronic Corporation (CEC) is the largest Chinese SOE in the IT Industry. With approximately $40 Billion revenue (2017) CEC is a group of 22 companies employing 130,000 people in a variety of domains including Semiconductor, System Integration, Hi-tech equipment, Display and IT Services. In the semiconductor space only, CEC is the Chinese leader thanks to its unique coverage of the entire semiconductor industry value chain. CEC is a world class group with a global ambition, and a nascent presence overseas, in Silicon Valley and the UK.

Agave Partners is a cross-border investment bank specializing in access to China for western world high-tech companies. The key domains of expertise of Agave Partners range from technologies to application domains. Agave Partners also has a good experience at advising companies, structuring transactions, organizing consortiums and navigating the administrative regulations like CFIUS in the US or SAFE in China. In associating with CEC Agave Partners will provide to the portfolio companies the value-added services to develop their business with China in any desirable way.

An ambition fueled by pragmatism

Agave Partners Funds is a forward-thinking invitation to large electronic corporations from China, USA and Europe to cooperate in fostering the development of technologies of global impact. The sponsors’ global ambition is to establish a platform where the key participants meet around a selection of the most advanced of hi-tech innovations which enlighten on the future of their application domains. The success of big ambitions requires to be grounded and progress in a controlled manner. Therefore, the Agave Partners Funds are a series of funds progressively put in place one after the other. It is about walking before running. Starting with a modest $50 Million fund from China and from the US and Europe, the prospect is to build on success and to grow over time with the ambition to reach $500 Million in the fourth fund.

For this purpose, the core directions of the management team are to :

  • Put in place a small core group of corporate investors aligned to the cause;
  • Deliver an extraordinary portfolio of investments in technological companies of high interest for the corporate investors;
  • Create a cohesive dynamic between the corporate investors and the management team to insure the investment decisions are made at the cross road of needs and opportunities;
  • Grow as we go in adding over time new corporate investors attracted by the existing dynamic, to the next funds.

Core team

Robert Troy, Managing Director. Robert’s primary focus is on helping companies go International. He is a multi-cultural and multi-experienced executive cumulating American and European experiences as well as expertise in software technology, entrepreneurial development and investment. Robert is a former venture capitalist and fund manager who founded Geneva Venture Partners, a San Francisco based venture capital firm which invested in high-tech start-ups. Geneva Venture Partners was an early stage investor in number of successful companies including SalesForce.com (NYSE:CRM), Zantaz (Autonomy), Callixa (SAP), Tradec (Agile) and NetXen (QLogic). Before founding Agave Partners, he transitioned to late stage high-tech and CleanTech investment in managing a large portfolio of $1.2 Billion investments in Silicon Valley companies. Born in France, he moved to the US in 1994 and became a US citizen after a successful career as an entrepreneur. He founded VERILOG SA, a Software Engineering company for mission critical applications. Verilog product lines, including Logiscope (IBM) and SAo Plus (Esterelle Technologies, SCADE) are used for a wide variety of systems including the Airbus aircraft, high speed trains, switching systems, cellular phones, defense applications and satellites. As President and CEO he oversaw the company’s international expansion. Early-on in his career, he was research engineer in world renowned French labs including INRIA and LAAS where he specialized in dependable computing. Robert holds a Doctor degree in Computer Science and lives with his wife in San Francisco , California.

Jun Jia, Managing Director. Jun is a senior business leader with over 20 years of extensive experience in R&D management, marketing, sales and strategic business development in the telecommunication and semiconductor industry. Jun is the General Manager of CEC Capital Management LLC, a subsidiary of China Electronics Corporation and Huada Semiconductor. In this position he oversees the corporate venture fund focusing on IOT, industry control and semiconductor related areas, as well as managing the R&D center in the Silicon Valley. Jun had held various management positions in Huahong, Intel and Shanghai Bell Co . Ltd. Jun Jia holds BS of Electronic Engineering from Fudan University, and an Executive Management degree from Shanghai Jiaotong University. Jun Jia lives in Silicon Valley with his family.

Investment Strategy

Objectives - The objective of Agave Partners Fund One is to :

  • Achieve outstanding returns on investments to the limited partners.
  • Invest in the core technologies supporting the most disruptive innovations in transportation, manufacturing, robotics, artificial intelligence and a variety of other industrial applications.
  • Satisfy the explicit interests of the corporate limited partners technologies in their own application domains.
  • Grow the portfolio assets in assisting portfolio companies in a variety of needs including sourcing new financing, developing business in China, sourcing strategic partners, preparing for an IPO , preparing for an exit through acquisition, navigating the USA and Chinese administrative hurdles (CFIUS, SAFE…).

Stage of investments - Agave Partners Fund One will mitigate risks and rewards in investing in post Series A opportunities, whereas,

  • Significant proof of concept and market interest are demonstrated.
  • A core management team led by a credible entrepreneur is in place, with a realistic understanding of what it will take to scale up the company.
  • Valuation of the company versus midterm growth potential are such that the return on investment is expected to exceed ten times the money invested.

With Fund One the General Partner intends to allocate $5 Million per portfolio company; $2 Million in first investment and $3 Million in follow-on investments in the same company.
Given the special value added provided by the Fund affiliation with Agave Partners investment bank, the Fund expects to keep a lead position and therefore a board position in its portfolio companies thanks to its ability to build consortiums and to lead most of the following rounds of financing.

For the most promising of its portfolio companies the Fund will seek to get authorization by its Limited Partners to bridge investments with the next Fund.

Investment topics - The General Partner intends to set-up an investment committee involving the key sponsoring Companies (Investing at least $10 Million in the limited Partnership). This investment committee will have authority to define the domains and technologies of relevance to the key sponsors.

For instance, if the investment committee selects some of the following domains

  • New Materials
  • Manufacturing
  • Automobile
  • Avionics

The drivers of innovations in these domains will be such technologies as

  • High performance processing
  • Artificial intelligence
  • High precision motor control system
  • High performance energy storage and conversion system
  • Sensor fusion
  • Human-machine interface/interaction
  • High-speed secured connection

The intent of the Fund is to investment in the electronic/semiconductors building blocks which are at the core of these technological innovations because they are the enablers. These building blocks are components such as:

  • CPU/MCU
  • Power devices and drivers
  • Power management chips and systems based on Si/SiC/GaN.
  • FPGA
  • Sensors
  • High speed interface chips and solutions for industry
  • Software development platforms

Focus on the semiconductor opportunity.

The Fund key strategy resides in resolving an imbalance existing between semiconductor innovations and its financing. The situation can be characterized as follows.

On the industrial side,

  • The global market for semiconductors has reached $353B in 2016 with a YoY growth of 2%;
  • The US have built over decades a world class industry of semiconductors; Europe has done the same but to a lower extend;
  • China has undertaken over recent decades a massive industrial development in such domains as automotive, manufacturing, avionics, customer electronics to the point of becoming the number one manufacturer in most of these domains. These domains requiring massive use of semiconductors. But the domestic supply is rather limited and account for no more than 30% of the need. Therefore, China is actively engaged in building a world class semiconductor industry to catch up with its domestic demand.

On the innovation side,

  • All industrial countries are confronted to technological innovations driven by big trends in evolutions of automotive, avionics, manufacturing and other domains which call for a surge in semiconductors innovations.
    If we take for instance the big data technological domain alone, a combined evolution of high performance computing, AI chip and next generation memory technology, is required to build a solid foundation for big data applications.
  • Europe and the US have an established innovation culture and know how in Semiconductors;
  • But these innovations are poorly supported by venture capital and private equity;
  • China which has a most recent culture in semiconductor is somehow investing in foreign semiconductor innovations in anticipation of its industrial needs;
  • Overall, the traditional chain of financial support of semiconductor innovations by venture capital or private equity is not totally broken but not strong enough to prepare for the massive demand of new industrial trends.

Therefore, large corporations have interest in joining forces and engaging in the financing of the must have semiconductor innovations they will need to support their future industrial developments. This is the purpose of Agave Partners Funds. This initiative is not unique, a growing number of corporations are developing or co-investing in corporate ventures.

Contacts for more information:

Robert Troy, Managing Director
Robert.troy@agaveph.com
+1 (415) 517 0978 (U.S.)

Jun Jia, Managing Director
jun.jia@cec-capital-llc.com
+1 (626) 295 3340(U.S.)
+86 13916344804 (China)