China's Genesis targets $600m for second fund

The International Finance Corporation (IFC) is considering an investment of up to $120 million in the vehicle, likely to be made alongside IFC Asset Management, which manages third-party capital. The development finance institution previously committed $25 million to Genesis’ debut fund in 2016, which closed at $400 million.

The firm focuses on growth stage investments, leveraging its networks and expertise with a view to helping Chinese internet start-ups achieve critical mass. Areas of interest for Fund II include e-commerce, B2B platforms and enterprise services, education, healthcare, and logistics.

Investments by Genesis, called Yuan Sheng in Chinese, include Chinese technology firms such as Huochebang, an online logistics platform that agreed last year to merge with domestic rival Yunmanman, and Taimei Medical Technology, a developer of software for the pharmaceutical and clinical research organization sectors. The firm has also backed online tutoring platform Zhangmen and medical imaging firm Beijing Infervision.

Genesis is one of numerous venture capital firms established by teams from China’s leading internet companies. Some of these teams retain ties to their former employers, ranging from loose agreements to collaborate on deal-sourcing to direct economic interests in the GP. Genesis sits towards the independent end of the scale, having decided against raising capital from Tencent.

Other spin-outs from tech giants include Xianghe Capital, which was established by several former Baidu employees, and GenBridge Capital, a private equity firm set up by investment professionals who previously worked for JD.com and TPG Capital. Meanwhile, Vision Plus Capital Partners, a VC firm set up by one of the co-founders of Alibaba Group, recently raised $500 million for its second US dollar and renminbi-denominated funds.

Speaking at the AVCJ Forum last November, Peng observed that it is not easy for managers to raise their first funds after leaving a large financial institution or internet firm. He had to meet 150 LPs in order to reach the $400 million target for Fund I. Meanwhile, on the investment side, Peng had to adjust his style to focus on a smaller number of deals, rather than the 100 per year when he was at Tencent.

“Now we only do 2-3 deals per year, and 10-15 companies in total from a fund. That means we have to be much more careful on due diligence and spend more time supporting portfolio companies. Also, we wouldn’t think about exits from day one when we were at Tencent, but now we have to,” he said.

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• Topics
• Greater China
• Venture
• Fundraising
• GPs
• China
• Technology
• TMT
• Growth capital
• Logistics
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