China’s Sinovation Ventures raises $674m across two funds

The US dollar fund, Sinovation Fund III, closed at $300 million, exceeding a target of $250 million. The LP base comprises international pension funds, fund-of-funds, family offices and strategic investors, as well as the International Finance Corporation (IFC), which proposed a $15 million commitment to the vehicle in January.

Investors in the renminbi-denominated fund, which closed at RMB2.5 billion ($374 million), include renminbi fund-of-funds, government-backed start-up funds and A-share listed companies, according to a release.

"We believe that the new dual-currency funds will strengthen our investment capacity," said Kai-Fu Lee (pictured), the firm's chairman and CEO, who previously served as head of Google China. "Sinovation Ventures has investment teams in China and in the US that can grasp pivotal investment opportunities in the two countries, and effectively make full use of both renminbi and US dollar funds, in order to achieve the perfect combination of global and domestic investment."

The new funds will focus on artificial intelligence (AR), enterprise software and entertainment content-related start-ups. Over the past few month, the US dollar vehicle has invested in China-based autonomous technology developer Uisee and AR company 4th Paradigm, as well as US robotics start-up Wonder Workshop, The renminbi fund has backed Chinese video-streaming platform Mewe Media and bakery chain Withwheat.

Sinovation was launched in 2009 under an incubation-plus-investment model. The incubator identified companies or individuals with potential and got them started. Those deemed to have sufficient potential received early-stage backing from the Innovation Works, with other VC firms brought in as the companies gather momentum.

The firm's first US dollar fund closed in 2011 at $180 million, with commitments from WI Harper, Silicon Valley Bank, Baillie Gifford, Sequoia Capital, IDG-Accel, and Foundation Capital, plus some North American pension funds and Silicon Valley executives and entrepreneurs. WI Harper served as co-manager of the fund. Fund II closed in 2012 at $275 million with participation from 42 LPs.

Sinovation listed its incubation business on the National Equities Exchange and Quotation (NEEQ), also known as the New Third Board, earlier this year. The publicly-listed entity does not include the renminbi-denominated fund management business.

While Sinovation continues to work closely with founders, providing a variety of value-added services - such as product design, marketing, recruitment and legal services - in addition to capital, it is now more of an early-stage investor rather than an incubator. Since inception, it has backed some 300 Chinese start-ups.

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• Topics
• Greater China
• Fundraising
• Venture
• Early-stage
• Technology
• Renminbi fund
• China
• Innovation Works
• TMT