FENG TAO
NEWMARGIN VENTURES, SHANGHAI
Spend time with Feng Tao, one of China's most successful venture capitalists, and you will hear a lot about "fake people." His Shanghai-based firm, NewMargin Ventures, weeds through 3,000 proposals a year from businesses hungry for a portion of its $100 million pot. Somehow he's got to sniff out the real deals from the pretenders.
It's a task he does well. In 1997, while working for a multinational mining-finance group, he was among the first investors in Sina.com which became one of the world's largest Internet portals. His prescience won the attention of Beijing economic planners eager to set up a local VC firm to jump-start the country's technology sector, and in 1999--with $5 million in state investment and a board of directors made up of senior government ministers--NewMargin entered the market as an odd hybrid of old-school state planning and free-market hustle. It now counts telecom giants like Motorola and Alcatel among its investors and this year, according to Feng, will triple its investment capital.
Feng, 37, is a bit of an odd hybrid himself. He grew up in Shanghai, studying the traditional art of calligraphy, while his parents lived in Beijing, where his father served as a high-ranking communist cadre. After attending the prestigious Harbin Institute of Technology (he majored in "the automatic control of intercontinental missiles"), Feng moved to Canada, eventually earning a Ph.D. in math from the University of Toronto. His first business venture back in China, which made him a millionaire at 26, created joint ventures in gold and diamond mining and then sold them through a deal with multibillionaire mining financier Robert Friedland.
While many of NewMargin's projects are in IT, Feng still invests in companies that allow him to get his hands dirty. When he discovered Shenzhen-based hazardous-waste- treatment outfit Dongjiang in 2001, it was making a scant $100,000 a year collecting refuse from factories and, according to Feng, treating it so inexpertly that the company caused more pollution. Feng's younger brother Bo, also one of China's leading VCs, advised him against an investment. "It didn't look like a winner," admits Feng. But with his guidance, Dongjiang now boasts clients such as IBM, bringing in an average of $1 million a month, extracting copper from chipmaking by-products and detoxifying what's left over free of charge.
In the corner of his office, which occupies the second floor of a century-old Italianate villa just blocks from where he grew up, Feng keeps a porcelain jar full of rice-paper scrolls so that he can practice his calligraphy between deals. On weekends he studies oil painting with his 7-year-old daughter. He hopes that by the time she grows up, he will have become chairman of China's largest gold mine--a fitting aspiration for a man with a knack for spotting buried treasure. --By Susan Jakes/Shanghai