Vivo boosts fund for cross-border play

Fund VIII is twice the size of its predecessor, which was closed in 2012. While US-based LPs account for 50% of the corpus, Asian investors have contributed 35%. By comparison, US institutions were responsible for about 80% of the capital committed in the seventh fund, with the remaining 20% coming from Europe and Asia.

"The capital from Asia was very different from the US. The US has many different sources of institutional capital. In Asia a few years ago it was almost all family offices," says Frank Kung, the VC firm's managing partner.
"But there has been a ground shift. Asian investors are becoming more institutionalized and they're actively looking for opportunities outside of their own countries."

Vivo started out as an US-based venture fund in 1996. China investments started from Fund V, which was closed in 2005, with a 5% allocation to the country. By the next fund this had rise to 20% and then 40% in the seventh vehicle. For Fund VIII, Vivo expects a 50-50 split between the US and China.

"The increase in the fund size doesn't mean that we'll do many deals - we plan a similar number of deals to Fund VII," says Kung. "We will continue to invite co-investors in each deal, but the number of co-investors will be fewer. We will increase our dollars committed in per transaction."

The VC has expanded its team to handle the larger corpus. There were about 10 investment professionals when Vivo closed its seventh fund, but now it has 18 people in the US and China. After opening its first office in Shanghai in 2006, Vivo established a presence in Chengdu to manage renminbi-denominated investments. Two years ago, it hired Shan Fu, a former senior managing director with The Blackstone Group, to open a Beijing office.

Although Vivo focuses on technological synergies between China and the US, the firm's strategies for the two countries differ somewhat. In the US, Vivo targets late development stage pharmaceutical and medical devices developers - where there is a high probability of getting regulatory approval - in the private and public market spaces. In China, there is more of a growth capital approach.

"In China, everyone wants to put their money into healthcare, but we are able to convince the CEOs to choose us as a partner. In order to keep their growth engines moving forwards, they need to give up their existing pipelines because most of the products are generic." says Kung. "We are a value-add investor that brings new technology from the US for these Chinese firms."

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• Topics
• Greater China
• Healthcare
• North America
• Fund-of-funds
• Fundraising
• Vivo Ventures
• China
• USA
• healthcare
• Fund-of-funds
• Fundraising