Good Times for Asia's Young Entrepreneurs

Thanks to an improved business climate and a wave of funding from U.S. venture capitalists, the region's entrepreneurs are finding success right at home

by Bruce Einhorn

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Time was, the goal of an ambitious young Asian entrepreneur was to make it big—in the U.S. When Bo Shao got an MBA from Harvard Business School in 1999 and then returned to China to launch EachNet, an eBay-style consumer auction site, he was the exception to the rule, he recalls. "Of the 11 people originally from mainland China in my Harvard class, I was the only one in China," says Shao. "Everyone else wanted a green card."

In the years since, the situation has reversed. With top Silicon Valley venture capital firms on the prowl in China, India, and other parts of Asia, all of them eager to fund the entrepreneurial dreams of young Asians, now it's unusual to find people who don't want to return to the region, says Shao. Of his other Harvard classmates, "all of them are in China today, which is amazing," he says. "I would venture to say that most people from subsequent classes are in China." One lure was the success of Shao himself: After launching EachNet in 1999, he sold the company to eBay (EBAY), which bought a minority stake for $30 million in 2002 and then paid $150 million for the rest of the company in 2003.

That's the kind of payoff many young entrepreneurs in Asia have in mind. This year, BusinessWeek's annual report on Asian entrepreneurship features 25 finalists for the title of Best Young Entrepreneur in Asia. BusinessWeek readers nominated candidates and the magazine's editors and reporters in Asia suggested names, too. We then narrowed down our list to 25 people whom we feel best represent the creativity and energy that's now increasingly common among startups across the region. Readers can see profiles of the top 25 and vote for their favorite here.

Not Just Low Cost

Young business people like these are catching the attention of American financiers, who are taking notice of the improved climate for local entrepreneurs. Dave Furneaux is founder and managing general partner of Kodiak Venture Partners, a VC firm based in Waltham, Mass., that has $700 million under management and has been doing business in the region for more than 15 years. When he first started funding startups in the early 1990s, he says, most of the focus was on Asian immigrants in the U.S. who had gone to American universities and then stuck around to work for companies and eventually start their own. Later, he says, people like Shao would decide to return home and start their companies back in Asia.

"We are seeing the next wave," says Furneaux. Universities in China itself are improving rapidly, and now more and more of the country's top students feel they don't need to leave China to get a top-notch education. So American VCs are paying more attention to local entrepreneurs who have never lived in the U.S. and have a good feel for the local market's needs. "As a result, you see more entrepreneurship springing up," he says. "It's become viable and there's more of a need for companies."

There's also a growing base of startups that are basing their businesses not just on leveraging Asia's low costs but on providing creative solutions to problems. John Hummelstad, regional director of emerging technology and venture capital in Asia-Pacific for Microsoft (MSFT), says he's impressed by the dynamism of entrepreneurial companies in India, China, and Southeast Asia. In India, for instance, "you see some incredibly innovative software companies that have developed their own intellectual property and are going to the rest of the world," he says. "Before they were writing code for others, and now they're developing their own code base and moving forward from there."