IDG spin-out Banyan Capital raises $206m for China fund
Banyan Capital, a China-focused VC group that spun out from IDG Capital Partners, has closed its debut fund at $206 million. High net worth individuals – primarily the founders and CEOs of companies the team backed while at IDG – contributed more than half of the capital raised.
The fund - Banyan Partners Fund I - had an initial target of $150 million and a hard cap of $200 million, but ended up oversubscribed after only about two months in the market.
Banyan is led by Zhen Zhang, Xiang Gao and Bin Yue who focused on tech, media and telecom (TMT) investments for IDG. Zhang and Gao, who were both partners at the VC firm, have been working together for about 10 years. Yue also previously worked at advisory firm China Renaissance Capital.
According to a source familiar with the situation, the three decided to leave IDG ahead of its new fundraise because they wanted to focus on TMT. IDG has a much wider remit, taking in consumer, healthcare, media and culture, and energy and natural resources, in addition to TMT.
The LP base comprises more than 40 investors, including entrepreneurs, family offices, fund-of-funds, foundations and other institutional players from Greater China and the US. The firm wanted to keep the high net worth portion below 50% but this was not possible due to strong demand from entrepreneurs familiar with the team from their IDG days.
The rapid fundraise comes at a time when China-focused GPs are facing headwinds. According to AVCJ Research, China funds drew commitments of $14.7 billion in 2013, the lowest level in four years. VC managers specifically raised $2.3 billion, down from $4.1 billion the previous year.
Ropes & Gray was responsible for Banyan's fund formation work, led by Geoffrey Chan, the firm's Shanghai-based private investment funds partner.
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