IBM Looks East For Innovation

While venture capitalists look to China to make a buck, IBM is teaming with VCs through its newly formed Venture Capital Advisory Council to scout out young firms from emerging markets that are developing innovative IT services, which could be exported to the West.One of the fastest-growing IT ventures in China is PayPal wannabe YeePay, which announced this month a tenfold increase in customer transactions in a mere five months. YeePay--Chinese for "easy pay"--is an E-payment platform built using open-source technologies that lets customers make real-time payments over the telephone or online. Last month, YeePay handled transactions valued at more than $1.2 million, up from $120,000 five months ago.

Drew Clark, director of strategy and co-founder of IBM Venture Capital Group, characterizes micropayment systems such as YeePay's as the linchpin to broadband wireless services that are sweeping Asia. Most Chinese and many Asians don't have credit cards. YeePay signed deals with two large telecoms to tack on charges Chinese consumers make in purchasing goods and services to their monthly phone bills. "You can't make money that you can't collect from what's being rendered as services," Drew says. "YeePay, among others, are basically creating sophisticated micropayment and collection systems to bill and collect for services rendered.

Clark isn't sure whether YeePay's model can be exported to the West, but he doesn't rule it out. "PayPal is popular for eBay, but I don't see PayPay as a pervasive service in the entire Western world," he says. "I think there is room for competitors. I see them as innovative, as a brand-new model."