Asian investors have plenty of cash,

 a hearty appetite for investments and a different approach to doing deals – TechCrunch

Daniel Zimmermann

Contributor

Daniel Zimmermann navigates emerging companies and tech startups through complex corporate transactions, financings and venture technology matters.

The VC landscape has been shifting radically in the past few years as Asian investors pump cash into startups. Last year, Asian VCs invested 40 percent of the $154 billion in global venture financing, compared to a 44 percent stake for U.S. investors, according to a recent Wall Street Journal analysis.

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Asian VCs largely fund companies close to home, but their portfolios are expanding to include U.S. businesses. That influx of capital can be a valuable lifeline for founders who need cash to fuel hiring, product development and growth.

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Securing that money, however, demands cross-cultural sensitivities and negotiation skills more commonly exhibited by diplomats and ambassadors. American startup founders are often stunned to see how much control Asian investors demand in exchange for capital.

If you’re being courted by Asian investors — and it’s more likely than ever that you will be — you’ll need to adjust the VCs’ expectations. That can be a challenging task when the parties have different perspectives on appropriate management styles and levels of control.

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Taking stock

Disparate expectations often arise because laws governing investments, disclosures and financing terms vary from country to country, and conventions can be different. Prospective foreign investors routinely question the need for rights that are customary in the U.S. and may dismiss specific venture capital lingo as unnecessary or irrelevant.

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For example, conversion rights or registration rights appear to be arcane provisions that can be negotiated, but in the world of U.S. venture-backed companies, these are part of the overall deal structure and are expected by the stakeholders.

Doing deals