Vertex raises $275m for China venture fund

The fundraising process took approximately 15 months, with a first close coming in August of last year, according to sources familiar with the situation. Commitments came from LPs in Europe and Asia, including an anchor investment of $100 million from Vertex Holdings.

Vertex China raised $225 million for its previous fund in 2015. The team has been together since 2009, but this was its first dedicated China vehicle with capital from outside investors. Previously, Vertex Holdings was the sole LP. Vertex China received $80 million between 2009 and 2013, and then $150 million between 2013 and 2015. Nearly 40 investments were made during these two periods.

The switch to relying on third-party capital was accompanied by structural reforms. For example, the China team started to accrue all the carried interest and make investment decisions with no outside input. Vertex’s funds in Israel and the US – which also raised money from external LPs – underwent similar changes. The India and Southeast Asia operation followed suit in 2017.

Earlier this year, the India and Southeast Asia team raised $230 million for its latest vehicle, up from $210 million in the previous vintage. Last week, Vertex announced a final close of $290 million on its debut growth fund. The vehicle will invest globally with a focus on the stronger companies already backed by Vertex’s early-stage funds.

The third China fund included Mobike, a bike-sharing start-up that was acquired by Meituan-Dianping last year at an equity valuation of about $2.7 billion. The company’s early investors generated double-digit multiples. Another liquidity event came with the RMB1 billion ($148 million) Star Market IPO of drug developer Chipscreen Biosciences. The company now has a market capitalization of nearly RMB30 billion.

The portfolio also features eyewear brand Loho, which completed a $100 million Series C round earlier this year, and Horizon Robotics, a developer of microprocessors for machine learning and artificial intelligence technologies that raised a $600 million Series B at a valuation of $3 billion.

A total of $5.7 billion has been raised for China-focused venture capital funds since the start of the year, according to AVCJ Research. Of this, $4.7 billion has gone to US dollar-denominated vehicles. This compares to $13.1 billion and $3.9 billion in 2018 and 2017, respectively. The likes of Xiang He Capital, Sky9 Capital, XVC, 01VC and Joy Capital have reached final closes in recent months.

Atlantic Pacific Capital served as placement agent for Vertex’s latest China fund. The firm declined to comment on fundraising.

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• GPs
• China
• Vertex Management (II)
• TMT