IDG Treks Into Communist Vietnam

The communist state of Vietnam is about to benefit from some good ol’ U.S. capitalism.

Global media and research provider International Data Group (IDG) of Boston announced late last month that its venture capital affiliate, IDG Ventures, would launch an $80 million venture capital fund in the Socialist Republic of Vietnam, which is roughly the size of the U.S. state of New Mexico.

The new fund, named IDG Vietnam, will invest the $80 million in Vietnamese startups with the goal of taking between a 20% and 80% stake in each portfolio company.

The venture group will seek board representation in most cases.

San Francisco-based IDG Ventures is currently setting up the group and hiring general partners.

IDG expects IDG Vietnam to begin making investments by the first quarter of 2004 and to potentially invest up to $100 million over the next seven years.

IDG Vietnam will invest in companies in software outsourcing, semiconductor design and varying areas of cell phone and telecommunications technology as well as Internet commerce Web sites and technology, says Patrick McGovern, the founder and chairman of IDG.

“This is an extension of our Asian expansion,” says McGovern. “We’re just continuing our country-by-country expansion of our fund group.”

Last year IDG established a $1 billion fund for investments in Vietnam’s northern neighbor, China.

McGovern says that IDG has already shown promise on its returns there. “Our annual IRR [in the China fund] has been 45%, so we’ve been very happy with the results,” he says.

IDG Ventures has approximately $600 million under management. IDG Ventures has offices in Boston, San Francisco and Seattle in the United States.

In China, IDG Ventures operates offices in Beijing, Guangzhou, Shanghai, Shenzhen and Tianjin. IDG also has a European office in London with a $100 million fund. In the United States, it has earmarked $100 million for East Coast investment and $160 million for West Coast investment.

IDG Ventures’ portfolio includes Santa Clara, Calif.-based Analogix Semiconductor, a semiconductor company ; OpenReach, a Woburn, Mass.-based virtual private networking software and services provider; and Superdata Software Holdings, a Guangzhou, China-based developer of integrated business management software that held an IPO this past June.

Email Matthew Sheahan