Weekly digest - September 20 2023
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20 September 2023
COVER STORY
Hong Kong’s family office incentives are intended to redress a balance that has swung towards Singapore. Geopolitics is dampening competitive advantages.
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TALKING POINTS
AVCJ AWARDS 2023 - NOMINATIONS CLOSE SEPTEMBER 28
The submissions deadline has been extended, giving industry participants until September 28 to put forward the firms, fundraises, investments, and exits they believe worthy of consideration. For more information, go to www.avcjforum.com/awards
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ANALYSIS
CYBERSECURITY: PE URGED TO GO POST-QUANTUM
 Private equity firms with masses of information, long histories, and long futures will be vulnerable to code-cracking quantum computers perceived as lurking on an inevitable near-term horizon.FUND FOCUS
VERTEX EMPHASIZES REALISATIONS
 Growth rounds for cashflow positive companies have facilitated most of Vertex Ventures Southeast Asia and India’s exits – and laid the ground for its recent USD 541m fundraise.FUND FOCUS
PI VENTURES TRIPLES ITS DEEP TECH FIREPOWER
 While deploying its debut fund, India-based machine learning specialist Pi Ventures realised it was in fact a deep tech generalist. LPs have come along for the ride. |
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By the Numbers
AVCJ RESEARCH
EVOLUTION OF CHINA VC
China was a melting pot of ideas in the early to mid-2000s. The technology opportunity was beginning to crystallise, but at first there was no formal venture capital to fund it. Most early movers received a helping hand: IDG Capital and SoftBank China Venture Capital had corporate money; overseas angels backed NewMargin Ventures and Ceyuan Ventures; and some partnerships with US venture capital firms emerged.
Even those partnerships weren’t necessarily uniform. Northern Light Venture Capital was seeded by NEA and Greylock Partners, but it never operated under the same brand. Sequoia Capital China did, but the relationship with Silicon Valley reflected the market at a certain point in time. Later affiliates (in some cases, US firms invested in China for years on a fly-in-fly-out basis before putting down roots) had their own idiosyncrasies: Redpoint Ventures, KPCB, Lightspeed Ventures. It is relevant today because the recently announced brand separations – Sequoia becoming HongShan, BlueRun Ventures China transitioning to Lanchi – might have similar motivations but they are also happening from subtly different starting points. Moreover, the market evolved to the point where those trailblazing affiliates are not the dominant force and haven’t been for some years. Ranking China VC firms by size of their largest funds, HongShan is joined in the top 10 by two other US offshoots that still carry the international brand: Matrix Partners China and Lightspeed China Partners. Two more are former captives (5Y Capital and Lilly Asia Ventures) and five are spinouts (Gaorong Capital, Source Code Capital, Ince Capital, Lyfe Capital, and Xianghe Capital). Lyfe and Xianghe emerged from Chinese companies, not from affiliates of US-based GPs. Looking further down the list – and at the team bios of numerous spinouts – the emergence of entrepreneurial talent from local technology players is the dominant theme of the second or third generation much as Silicon Valley helped define the first. 
All of the trends featured here were sourced from AVCJ's proprietary database, AVCJ Research, featuring comprehensive information on private equity deals, fundraises and exits.
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