My work in venture capital has been focused mostly on the United States, but comparative work on venture capital financing is fascinating stuff. Knowledge@Wharton offers the following insights on Asian venture capital from Wharton Professor Raffi Amit:

Consider term sheets, the legal agreements that venture investors use to lay out the conditions for their investments. “Some of the clauses are perceived by Asian entrepreneurs as offensive,” Amit said. They interpret the contracts as a sign that the investor doesn’t trust them rather than as a normal means of doing business.

Similarly, some Asian entrepreneurs don’t understand why venture capitalists want to be heavily involved with their companies, checking in weekly and participating in board deliberations. “The entrepreneurs say, ‘What? You don’t trust me?’” Amit said. “It’s not a matter of trust. It’s a matter of creating a whole that’s greater than the sum of the parts. The VC has been in this movie many, many times before. He can help open doors to potential customers and recruit professionals. He can do all sorts of value-added activities.”

The thing to notice here is that the structure of venture capital relationships is influenced significantly by local culture. This (perhaps obvious) insight ties into some comparative work that I am still doing between U.S. and Finnish venture capital relationships. When I began that project, many years ago, differences between the countries called out for an explanation. In the interceding years, Finnish relationships have changed dramatically, and today venture capital contracts in Finland look very similar to U.S. contracts.

How does one explain the change? Is this global cross-reference? (The Finns looked at our contracts and liked what they saw.) Or perhaps powerful forces of globalization? (This explanation would seem more appealing if the market for venture capital were truly global.) I am still working that out, but I suspect that we might see similar movement in Asian venture capital relationships in the near future.

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