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Silicon Valley's David Chao & the killer Japan IPO

david chao.gifDavid Chao, a venture capitalist with Silicon Valley's Doll Capital Management, is on a bit of a roll.

We haven't checked definitively, but he may have just hit a record, with the recent initial public offering of the Japanese version of About.com. The stock jumped 727% on the first day, according to the Red Herring. We're still trying to find out more about this, because there's an odd ring about it.

As Techdirt mentions, this is a bit ridiculous, as it means the company left a whole bunch of money on the table (it sells stock, makes a bit of money, but as the stock increases after the IPO, it is the traders who make all the difference). Techdirt has reason to be skeptical.

..the company raised a grand total of $17 million out of the IPO. That's not all that much, right? Thanks to the stock pop, though, the company is now valued at a whopping $1.24 billion. That could be okay if the company were rolling in cash, but it only had revenue of $20 million for the entire last year. Meanwhile, especially in an age of blogs, it's not as if the idea is all that defensible. With an IPO like that, you can pretty much bet that others in Japan are actively working on clones of the idea. Looks like the internet bubble is alive and well in Japan.

Now, we have no idea what...

...the experience has been on the Japanese stock market, but you may recall that the record setting IPO during the U.S. Internet bubble was that of VA Linux, the Linux-based software company, which soared 698 percent in its December 1999 IPO.

David Chao, we'll note, is the same guy who recently cracked China for Silicon Valley VCs, namely with his investment in the job company 51Job. So he's hitting homeruns in both China and Japan. Of course, read his bio and you'll see that he's the guy to do it, if anyone can. The tours with Janet Jackson, and the luring of a Japanese Sumo-house are the lighter side.

Hopefully, Chao will be able to steer this Japanese company a little better than he did 51Job, which hasn't done too well lately. However, it is true that Chao told us a while back -- right after the 51Job IPO -- that he worried whether Chinese management experience is strong enough. May not be the case for Japan, but still, that's a ridiculous pop.

Finally, Techdirt adds:

Of course, it's a bit odd that the only news source that seems to be talking about this event is the Red Herring link above. Considering they got the name/URL wrong, it makes you wonder if other details are wrong as well. Red Herring also fails to mention that the VC investor in the company who they quote just happens to serve on the board of Red Herring.

This is indeed odd. We note, though, that Chao is on the board of advisors, which is different from board of directors.


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Comments

Found something (Y! Finance Japan) regarding the All About Japan IPO:

http://biz.yahoo.co.jp/ipo/html/d2454.html

That said, news regarding this IPO is definitely scarce. Not sure why...

Gen Kanai on September 19, 2005 10:01 PM
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Also, fwiw, the company itself has a page for investors regarding the IPO on JASDAQ.

http://corp.allabout.co.jp/ir/profile/message.htm?FM=all

Gen Kanai on September 19, 2005 10:03 PM
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