Matrix China raises $750m for Fund VI

The fund received commitments from 48 investors, according to a regulatory filing. The total is the same as for Matrix’s fifth vehicle, which closed in mid-2018. However, several months later, a sidecar of $77.9 million was disclosed. No details were given as to its purpose, but other Chinese VC firms raise separate, smaller pools comprising contributions from management and entrepreneurs in their networks.

Matrix closed its fourth fund at $500 million in 2016 and its third at $350 million two years before that. Both vehicles had sidecars.

The firm – an affiliate of US-based Matrix Partners – was established in 2008 and is led by Bo Shao, David Su and David Zhang. Matrix Partners India launched two years earlier and is currently deploying its third fund, which closed at $330 million in 2018. Within China, the firm makes initial investments of $1-10 million, preferring to come in as the first institutional investor and the largest non-management shareholder. It makes selective seed and later-stage investments.

The Matrix portfolio currently includes the likes of ride-hailing platform Didi Chuxing, online car trading business Chehaoduo, English language tuition specialist Vipkid, electric vehicle manufacturer Lixiang Automotive, industrial e-commerce platform Zhenkunhang, and commercial rocket developer iSpace.

Over the course of 2019 and January 2020, the VC firm participated in 167 new investments and follow-on rounds. There were 28 exits, among them IPOs in the US for audio streaming platform Lizhi, online brokerage Futu Securities, cosmetic surgery marketplace So-Young, and media business 36Kr. Ronbay Lithium Battery listed on Shanghai’s Star Market. Cybersecurity specialist Chaitin, medical equipment manufacturer Reach Surgical, and app developer Hoodinn were acquired by strategic investors.

Matrix said in its annual review that the impact of COVID-19 would be relatively short term. It believes China’s aging population and its transition from rapid growth to high-quality growth will define the next generation of VC investments. The firm highlighted the importance of advanced manufacturing in delivering growth, structural deleveraging, and increased domestic demand. To this end, 5G technology, commercial aerospace, biotech, semiconductors, the internet of things, autonomous driving, and artificial intelligence are viewed as key opportunity areas.

The review, published in early March, noted that Matrix had completed 46 deals since the COVID-19 outbreak, including new investments and follow-on rounds. The new investments spanned healthcare, advanced manufacturing, consumer, B2B services, entertainment and social networks, education, and financial technology.

Fewer than 20 China-focused venture capital funds have raised $3.6 billion so far this year. In the full 12 months of 2019, there were nearly 140 partial and final closes amounting to around $9.2 billion. Qiming Venture Partners alone accounts for $1.1 billion of the 2020 total. There have also been first closes for HighLight Capital, Linear Venture and Vision Plus Capital of $300 million, $110 million, and $450 million, respectively.

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• GPs
• China
• TMT
• Matrix Partners