IBM and the Seeds of Revolution

IBM(IBM) hit on two hot-tech topics: China and open standards.

On Monday, Big Blue announced the creation of a venture-capital advisory council and offered developers in emerging markets free workshops that presumably will help them create applications more expeditiously.

IBM is initially bringing together seven venture capitalists to develop closer ties to the start-up world. The Armonk, N.Y.-based company is hoping to gain more insight into cutting-edge technologies and access to new business partners; the VCs are hoping to give their start-ups greater access to IBM's technical expertise and enormous sales muscle.

"Our customers are hungry for the best and brightest new solutions to accompany our middleware and lower-level components," says Drew Clark, director of strategy at IBM's Venture Capital Group in Menlo Park, Calif. "The venture capital firms themselves are really a lens for IBM to look into the world of start-ups."

Rather than investing directly in start-ups as do other companies such as Intel(INTC) and Microsoft(MSFT), IBM has focused more on developing partnerships with start-ups and investing in venture capital funds.

A relationship with IBM, however, is more important than Big Blue's investment in a fund, says Lip-Bu Tan, chairman of Walden International and a member of IBM's new VC advisory council.

"A lot of those small application-software companies have a hard time getting major accounts as a start-up company," he explains. "But a partnership with IBM Global Services will open the door and give them credibility."

IBM created the VC advisory council with both emerging markets and open standards in mind.

Walden, for instance, has been active in China and Hong Kong since 1994; and Tan, Walden's founder, helped pioneer the U.S. venture capital concept in Asia. Several of Walden's portfolio companies, meanwhile, are focusing on open standards, including SugarCRM and Funambol.