China's Gaorong closes fourth US dollar fund at $500m

The fund is similar in structure of the firm's third US dollar vehicle, which closed in April last year. It comprises a core vehicle of $450 million for institutional investors and a $50 million sidecar made up of contributions from management and entrepreneurs in the firm's network. Fund III featured a $350 million main corpus and a $50 million sidecar.

"Although the fund was oversubscribed, with substantial interest from existing and new institutional investors, we insisted on maintaining the original size of the main corpus because of the need for investment discipline," said Zhen Zhang, a founding partner at Gaorong.

The fund will follow much the same remit as its predecessors, focusing on early- and growth-stage TMT investments, according to a statement. Areas of particular interest include new retail, consumer and industrial internet applications, enterprise services, consumer upgrades, and culture and entertainment.

Gaorong was founded in 2014 by Xiang Gao, Zhen Zhang and Yue Bin (pictured) - who previously focused on technology, media and telecom (TMT) investments for IDG Capital - and now has around RMB15 billion in capital across nine vehicles under management. It claims that no other China VC firm has crossed the RMB10 billion threshold faster.

The firm changed its English name from Banyan Capital to Gaorong Capital in May this year, citing the need to achieve more consistent brand recognition. Gaorong is how the group's Chinese name is pronounced.

Among its portfolio companies are social e-commerce website Pinduoduo, which raised $1.63 billion in a US IPO earlier this year, as well as game streaming platform Huya, online-to-offline services platform Meituan Dianping and online healthcare specialist Pingan Good Doctor. These three companies also went public in 2018.

While the firm relied heavily on contributions from high net worth individuals in raising $206 million for its first US dollar fund, the LP base has become more institutional with each vintage. Fund II closed at $362 million in early 2015 and was followed by a $100 million co-investment vehicle that makes follow-on investments in existing portfolio companies.

Alongside the US dollar vehicles, the firm raised RMB320 million for its first renminbi fund in 2014 and then RMB560 million for the second, which closed in July 2015. The third RMB fund closed at RMB560 million in May 2018, while a RMB2.5 billion renminbi growth Fund closed in March 2017.

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• China
• TMT
• Fundraising
• Banyan Capital