Innovation Works closes first fund

Now Innovation Works has the capital to match its ambitions, with its debut fund closing at $180 million. The vehicle, which specifically targets Chinese internet companies, was oversubscribed, Innovation Works said.

Investors include WI Harper, Silicon Valley Bank, Baillie Gifford, Sequoia Capital, IDG-Accel, and Foundation Capital. North American pension funds are also involved, as are Silicon Valley luminary Ron Conway, Yuri Milner, best known for backing Facebook, Zynga and Groupon, and current and former executives from Yahoo, Google, YouTube, Facebook and Amazon.

WI Harper is co-manager of the fund.

Innovation Works operates under an incubation-plus-investment model. The incubator identifies companies or individuals with potential and gets them started. Those deemed to have sufficient potential receive early-stage backing from the Innovation Works Development Fund and venture capital firms are brought in as the companies gather momentum.

Lee said in May that 28 start-ups have joined the incubator and 11 received subsequent capital injections and are ready for Series A and B funding. The number of companies in the incubator program has now risen to 34 and nine have obtained Series A backing from third-party VCs.

Innovation Works' investment philosophy is rooted in several broad trends: that mobile internet will dominate; that Android will emerge as the principal system for these devices; and that Google would not win in china. Its initial entrepreneur targets were involved in a smart phone operating system, an app developer tool, an advertising platform, a PC companion platform and an Android app marketplace. Tapas, the operating system builder, received Series A financing from GSR Ventures in March.

Innovation Works claims to be more involved with its portfolio companies than the US equivalents upon which it is part based - a reflection of the fact that Chinese entrepreneurs generally require more mentoring than their seasoned American counterparts. Of these US operations, TechStarts now has a Chinese affiliate called Chinaccelerator, while 500 Start-ups and Silicon Valley Bank recently made their first forays into the country.

"Kai-Fu's Innovation Works is the top very-early-stage fund in China. We are proud to be an investor, and hope that IW will help to produce in China companies on the scale of Facebook, Zynga, or Groupon," Milner said in a statement.

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• Topics
• Greater China
• Venture
• WI Harper Group
• Sequoia Capital
• IDG Ventures