VC Firm Pushes Startups to Offshore Work

Trying to develop more tech startups in your community? Did you know this trend was affot?

Accel Venture Capital is leading a growing trend among venture capitalists to urgently --and mostly quietly -- push their companies to tap into larger markets and cheaper labor abroad.

Lately, droves of venture capitalists have boarded planes for flash visits to China and India to test the waters for alliances, investment opportunities and potential employees. Silicon Valley Bank, for example -- which underwrites loans to local start-ups -- arranges such visits.

John Doerr, a leading venture capitalist at Kleiner Perkins Caufield & Byers, is also courting the Indian community. At a recent appearance before an Indian business group in Santa Clara, he said a good number of his firm's start-ups now have operations in India.

"Rarely does a board meeting go by when we do not have some focus on being more aggressive about either offshore development in China or India," said Jim Breyer, a venture capitalist at Accel.

Most venture capitalists shy away from the "offshore" word, with local unemployment numbers still high. Not Accel. The firm takes the stance that venture capitalists are responsible for preparing their companies for global competition, and that includes offshoring. It's all part of a strategy to keep Accel's investments bringing in maximum returns.

A recent internal survey of 45 of Accel's portfolio companies showed that 38 percent had undertaken moves to hire abroad. By 2005, the plan is to knock that up to 75 percent.

More here.