In early April, the partners at Silicon Valley venture firm Benchmark traveled to China for a week of schmoozing with top executives at the country's biggest technology companies, including e-retailer Alibaba, search engine Baidu, social networking site Renren and smartphone maker Xiaomi.The plan was to gain insight on new business models, technology innovation and the ways those companies are expanding in the U.S.
The one thing they would not be doing: investing.
Despite having 618 million Internet users at the end of 2013, or about one-fifth the worldwide total, and half a billion consumers accessing the Web via mobile devices, China is a notoriously tough nut to crack for U.S. venture capital firms.
Extensive government control, lax accounting standards and an environment that's proven hostile to foreign-backed companies, has meant that many ambitious firms have lost money in the past decade. Plus, the booming tech scene in the U.S. has made looking overseas less attractive for many.
Benchmark, like other U.S. firms, has a complicated relationship with China, but still most know they can't ignore the world's second-largest market.
On this last trip, the four Benchmark partners—Bill Gurley, Matt Cohler, Peter Fenton and Mitch Lasky—along with Rich Barton, an Internet entrepreneur and venture partner at the firm, visited 10 companies and a few investors in four cities.
Rather than trying to find the Chinese Snapchat or the local Uber, they were looking to see what makes services such as texting app WeChat (owned by Internet giant Tencent) so popular among locals, and how future partnerships could be formed.
"Having connections into these companies has proven increasingly important," said Gurley, who joined Benchmark 15 years ago. "Anyone that's curious can't watch what's going on in China and not want to roll around in it."
Studying China now is mostly about satisfying that curiosity, Gurley said. He chats with heads of the fastest-growing companies to see how they're finding engineers, marketing products locally and abroad and, in the case of Xiaomi, taking on Apple.
Benchmark already has deep ties with Tencent, largely because of the Chinese company's investments in U.S. firms. Tencent bought a majority stake three years ago in Riot Games and more recently invested in disappearing-photo app Snapchat. Both are Benchmark-backed start-ups.
Investing is a different game, Gurley said. "Early-stage venture is an artisan business that requires a lot of hand holding, and we can't imagine doing it across an ocean," Gurley said. (Benchmark's Cohler has investments in Germany and Brazil.)