It took me a whole day to catch up with this article on VCs in China, and they quote Gerry Langler, a VC friend from Portland: "It's a scary thing because you worry the bubble phenomenon is moving five years later to a different locale." The article distinguishes between China-based VCs and "traveling VCs." Traditionally, venture capital investing has been primarily a local activity, and some are concerned that the traveling VCs will not add value by commuting to China:

The venture capitalist who visits a portfolio company once a week is likely to sense when something is wrong. But how can you tell if a start-up is suffering serious problems when your office is half a globe away? "The problem with the traveling V.C. is they come here for only one or two weeks and then they leave," [Jing Huang, managing director of the Softbank Asia Infrastructure fund] said. "That style of investing doesn't work in the U.S. or in European countries, so I'm not sure why people think China is supposed to be the exception."

That seems right to me, too. The secret sauce in venture capital is value added services, and those services are most valuable when the company and the VC are in close proximity.

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