Motorola steps up its China investments

After 18 quiet months of some behind-the-scenes activity, Motorola has stepped up its presence in China with three investments in the country.

Motorola Ventures, the VC arm of the electronics company, announced last month it invested in Shanghai NewMargin Venture Capital Enterprise; Shenzhen Shenxun Information Technology Development, a developer of software and services for cellular applications; and Legend Silicon a fabless semiconductor developer that is focused on cellular video processors and communications chips.

Matthew Growney, co-founder and managing director of the venture unit in Lexington, Mass., cited Motorola’s policy of not disclosing investment size and would not release any additional details. But a press release says that Motorola is now the largest LP in NewMargin, a $35 million high-growth fund that will invest in life sciences and tech deals. Motorola was also an investor in NewMargin’s first $35 million fund.

Growney says NewMargin’s first fund invested in 16 companies, of which 10 will exit in an IPO either in China or on the Nasdaq exchange.

“We’re extremely pleased with the first fund,” Growney says. The firm is closely connected through a family relationship to China’s political leadership and is backed by local Chinese governments and universities. No other details were available on the two other deals recently made by Motorola.

The three deals come as the VC group has kept a relatively low profile in recent years and reportedly reduced staff in its Beijing office in 2005. “We were quiet, not inactive,” says Growney, when he was asked about Motorola’s involvement in the China venture community.

“We got started late in 2003 and then made our first investment in NewMargin in 2004,” Growney says.

The only other venture investment by Motorola since 2003 has been in T3G, a fabless semiconductor design firm working in TD-SCMA cellular technology.

Growney says that the group will probably invest another $10 million to $12 million this year in one more company.

“But that may change if we get caught up in an investment in Korea,” he says.

Motorola entered China in 1987, which makes it one of the oldest foreign investors in the country. Over the years, it says it has invested more than $3.6 billion in China. Motorola is considered the largest foreign investor in China’s electronics industry with more than 9,000 employees.