DCM raises $170m China top-up fund, wins SFERS backing

The DCM Ventures China Turbo Fund was launched last month with a target of $170 million. It comes several months after the firm closed its latest main VC fund - DCM VII - at $330 million. About $220 million of the corpus will be invested in Chinese start-ups, compared to $150-$180 million in each of DCM's previous two vehicles, which closed on $500 million and $400 million in 2005 and 2010.

Meanwhile, there will be fewer US deals than before as Silicon Valley-based general partners, Carl Amdahl and co-founder Dixon Doll, reduce their involvement.

Already well-established in the US, top-up funds - that allow venture capital firms to continue supporting companies that choose to raise increasingly large sums of private funding rather than go public as soon as possible - are catching on in Asia.

Indian GP Nexus Venture Partners raised a $110 million opportunity fund from existing LPs earlier this year. For its first investment, the vehicle is said to have participated in a $133.8 million Series D round for e-commerce player Snapdeal, which was first backed by Nexus at the first institutional funding stage in early 2011.

Among the China VC firms, Morningside Technologies closed its third China technology, media and telecom-focused fund in February 2014 at $412 million. In addition to raising $279 million for the main vehicle, Morningside China TMT Fund III, the firm received $40 million for a parallel co-investment fund and $102.5 million for a "special opportunity fund," which is likely to target later-stage follow-on deals.

The Morningside portfolio includes Xiaomi, a Chinese smart phone manufacturer that has raised upwards of $450 million across one seed round and four institutional rounds, the most recent of which valued the company at a reported $10 billion. Morningside's participation dates back to the seed round. Xiaomi has yet to commit to a timeline for going public.

DCM has supported a number of Chinese companies through several rounds of funding, culminating in a US IPO.

Online marketplace 58.com, which raised $187 million when it went public last year, received capital from DCM across three rounds and the VC firm then subscribed to additional shares alongside the IPO. Online package tour operator Tuniu raised $72 million through an IPO earlier this year. DCM invested in three rounds before once again committing more funds alongside the public offering.

As of year-end 2013, SFERS had $16.9 billion in assets under management, of which 6% was deployed in private equity buyout funds, 3.4% in venture capital and 2.8% in special situations. Its alternatives exposure fell short of the policy target of 16%. Portfolio GPs include DCM VI.

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• Topics
• Venture
• Fundraising
• Technology
• Greater China
• Fundraising
• China
• Venture
• DCM-Doll Capital Management
• TMT