An expert on the benefits of venture capital Wang Chaoyong considers the past, and smiles towards the future.

As a venture capitalist actively investing in China I am very proud to see the important role played by the venture capital (VC) community in empowering the new generation of China's richest. Private wealth created over the past few years by venture capital and private equity investors in China has seen an extraordinary growth. Five people from last year's China Rich List were backed by venture capital, compared with only one from Rupert Hoogewerf's first list in 1999.

The impact of venture capital becomes more obvious on analysis of the number of people from the EuromoneyChina 2003 IT Rich List who received venture capital. The results show that half the people on the list were recipients of venture capital.

Table: Venture capital-backed entrepreneurs from the 2003 IT Rich List

Source ： EuromoneyChina, ChinaEquity Research

What do the recipients of last year's venture capital have in common? Most are young, well educated, and have studied or worked overseas, often inspired by the success of technology companies such as Microsoft, Intel, Yahoo! Or Google. In addition they have the vision and the passion to become leaders in their fields.

There is a set process to follow. In order to win VC investment, the entrepreneur must have a set-up suitable for a listing on Hong Kong or Nasdaq. This includes holding regular board meetings, and subjection to a financial audit from one of the Big Four accountancy firms. Most of last year's venture capital recipients not only follow a recognised business model but also play the game according to Western VC rules: round by round financing, and acceptance of the discipline of corporate governance and performance incentives . In the build-up to, and after, the listing they have to take all kinds of questions from Wall Street stock analysts and be prepared to face the consequences of missing profit forecasts. One entrepreneur likened this process to a “re-birth”.