IDG Capital Partners closes $1b China VC fund

The new vehicle, IDG Capital Fund III, will invest in technology, media and telecommunications (TMT), healthcare, energy and consumer-products. It won't only be putting its focus on growth-stage companies in China, but also international companies that are looking to enter the Chinese market.

The latest vehicle nearly doubles the prior fund's $586 million, which was raised in 2014 to focus on early-stage investments. That fund - IDG China Venture Capital Fund IV - also represented the first time the VC firm had tapped the market since 2011, when it raised two vehicles under the IDG-Accel banner. IDG-Accel China Capital Fund II raised $750 million for later stage and pre-IPO tech investments while IDG-Accel China Growth Fund III had $550 million for early-stage deals.

The firm has raised three other funds with Accel, three renminbi-denominated vehicles and smaller, targeted funds launched in partnership with Hearst and News Corporation, online game developer NetDragon Websoft, and peer-to-peer lender CreditEase, respectively. Earlier this month, it partnered with China Everbright to launch a joint M&A investment fund of at least RMB20 billion ($3 billion) in size.

Breyer Capital was founded by Jim Breyer, formerly managing partner at Accel Partners. Breyer helped form the joint venture between Accel and IDG, and he has extended the partnership through his own firm since IDG's last China VC fund. He will continue to play a leading advisory role in the new fund. 

"I have invested in China with the IDG team for over a decade and have been continually impressed by the caliber, creativity and drive of Chinese entrepreneurs working across a range of industries," Breyer said in a statement. "China continues to represent tremendous long-term investment opportunities, particularly in companies applying machine-learning and artificial intelligence to revolutionize a multitude of industries, including financial services, healthcare, and social media, to name just a few."

IDG's China VC operation was formed in 1993, one of the first technology firms set up in the country, and has exited more than 100 portfolio companies. It has made some notable investments including Baidu, Tencent Holdings, Qihoo 360 Technology, Sohu, Soufun, Xiaomi and CreidtEase.

According to AVCJ Research, a total of $3.5 billion has been committed to 19 China-focused venture capital funds so far this year. This follows two bumper years for the industry in China, with $8.7 billion and $7.6 billion raised - over the full 12 months - in 2014 and 2015, respectively.

The bulk of the 2016 capital went to GGV Capital, which raised $1.2 billion across three vehicles targeting early and growth stage investments. Qiming Venture Partners also posted a sizeable final close, raising $648 million for its fifth China fund, while DCM closed its latest global fund, which primarily targets investments in China and the US, at the hard cap of $500 million.

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• Topics
• Greater China
• Fundraising
• Expansion
• Venture
• Technology
• Healthcare
• Consumer
• TMT
• China
• Jim Breyer
• IDG Capital Partners