China Creation Ventures collects nearly $200m for debut fund

The GP was established in late 2016 and spent about nine months in the market raising Fund I. Commitments came from institutional investors and family offices. CCV has also sourced renminbi-denominated capital from investors, taking its total assets under management to approximately RMB3 billion ($440 million).

Investments made so far include JD Finance, the financial services unit of online retailer JD.com which was spun out last year and recently raised a new round at a valuation of more than RMB100 billion, according to a statement. The CCV team has also continued to invest in Ximalaya, a user-generated content platform for audio that it first backed while at KPCB.

Speaking at the recent AVCJ USA Forum, Wei Zhou, CCV’s founding and managing partner, offered insights into the firm’s deal-sourcing process. Every month, the team discusses promising business segments and then each member spends half of their time evaluating whether the firm should invest, and if so, how best to get exposure. The aim is to meet every potential investee within four weeks.

“Most of the time we make investments in companies that are not fundraising. We are the only VC investor looking at them, so it is easier,” Zhou said.

He cited Ximalaya as an example. KPCB decided to enter the space in 2013, reasoning that a move by China Telecom to reduce bandwidth charges for mobile would drive up consumption of media content. The team met with 50 companies before backing Ximalaya. At the time it ranked number four in the segment with two million users. It is now number one with 500 million users, has a $4 billion valuation, and is targeting a Hong Kong IPO.

During his 10-year stint at KPCB, Zhou claims to have invested in more than 30 companies, of which nearly one third have achieved unicorn status. There have also been 15 exits via IPO or M&A. CCV will follow the same TMT-focused remit, with the bulk of its capital going into Series A rounds.

However, it will be deploying capital in a much-changed environment as a younger generation of Chinese consumers – typically categorized as those born after 1990 – come to the fore. This group is characterized by a greater willingness to pay for online content and services, which is expected to accelerate the development of new business models and offer a clearer path to profitability.

“We believe that the era of large-scale profitability of Chinese start-ups has just begun. New people and new technologies will become the dual cores driving innovation and entrepreneurship." Zhou said.

CCV is one of several spin-outs from established venture capital firms to close a debut fund this year. Ron Cao, who launched Lightspeed Partners' China business, raised $200 million under the Sky9 Capital banner, while Chuan Thor, formerly of Highland Capital Partners, received around $270 million in commitments for his first fund at AlphaX Partners.

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• China
• TMT
• China Creation Ventures