Fund focus: SBCVC moves with the times in China

As its name suggests, SoftBank China Venture Capital - otherwise known as SBCVC - has enjoyed a close affiliation with SoftBank Corporation despite being an independent fund manager since inception. While the Japanese telecom giant accounted for the bulk of the GP's $100 million debut fund in 2000, over the ensuing years it has become one member of a more diversified LP base.

SBCVC has now closed its fifth fund at $459 million - well above the initial target of $400 million - after spending about 12 months in the market. US investors, including endowments and pension funds, make up the majority of the LP base for SBCVC Fund V, followed by Europe, Asia and Middle East. The International Financial Corporation (IFC) committed $25 million to the vehicle.

The GP closed its previous fund in 2011 at $386.7 million, while Fund III came in at $320.4 million in 2008. Both represented a step up from the 2000 fund and its $151.6 million successor, raised in 2006. However, the latter was accompanied by SBCVC Fund II-Annex, a $43 million sidecar vehicle through which LPs could co-invest in Fund II portfolio companies.

"SBCVC's investment team is very technology-centric. All of our senior partners have been entrepreneurs in the past. That's probably one of our biggest differentiating factors from other Chinese VC funds," says Kathy Chen, a partner and CFO at SBCVC. "Also, unlike some others, the majority of SBCVC's investments have not been in the consumer sector. Rather, the firm has focused on technology that leverages consumption growth."

Managing Partner Chauncey Shey was previously co-founder of UTStarcom, a broadband service provider that received early backing from SoftBank and went public in the US in 2000. Alan Song, also a managing partner, was a member of the same company's founding team. Meanwhile, Tim Liu, the third managing partner, set up Shanghai-listed high-tech company TongFang Corp.

SBCVC has backed over 100 Chinese companies across all stages of development, from pre-Series A to pre-IPO. Over time, the GP's sector focus has shifted in line with the market opportunity in China. Early-stage technology, media and telecom (TMT) deals formed the bulk of Fund I - notably Alibaba Group, which turned out to be a runaway success - and by Fund II healthcare was introduced to the mix, followed by emerging technology sectors such as cleantech and new materials.

"With the newly-established fund, while maintaining the existing focus and strategies, SBCVC is also looking at a lot of companies in the industrial 4.0 space, robotics, applied internet, and other technologies in the field of advanced industrial applications," says Chen.

The new fund will support around 40 Chinese companies looking to grow and gain access to international capital markets, typically focusing on middle-market businesses. Recent investments include social networking and video editing platform Acfun, online education platform Xuexibao and mobile healthcare service provider Shanghai KingYee.

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• Topics
• Greater China
• Venture
• Fundraising
• Technology
• Softbank China Venture Capital
• Fundraising
• China
• Venture
• Technology