DCM raises $880m for early-stage funds

The firm – which has teams in Beijing, Silicon Valley and Tokyo – closed its ninth flagship vehicle at $780 million. A filing dated May 2018 indicates a target of $750 million. A further $100 million was raised for DCM Discovery Fund Phase III, also known as DCM A-Fund III. This sub-series was established in 2011 to invest in start-ups reliant on the Android operating system, but its remit later broadened to encompass early-stage deals that don’t fit within DCM’s typical risk profile.

The firm closed Fund VIII at the hard cap of $500 million in 2016 and secured $100 million for the second A-Fund. This followed a $170 million final close on the DCM Ventures China Turbo Fund, which was launched to make follow-on investments in later-stage portfolio companies.

DCM claims to have made distributions to LPs in excess of $2.2 billion over the past three years, while its IRR across all funds during the last 10 years is above 50%. Fund VI, which closed in 2011, has generated an overall return of more than 5x; Fund VII is currently at 7x, putting it among the top performers globally from the 2014 vintage.

There were four IPOs in 2019: US-based payment software provider Bill.com, Chinese cloud computing specialist UCloud, Japanese human resources software developer Sansan, and financial software player Freee, which is also based in Japan. All apart from Sansan were backed by DCM from the seed or Series A rounds onwards.

Hurst Lin and Ramon Zeng remain DCM’s managing partners in China, leading a team of eight in Beijing. Zeng said in a statement that Fund IX would target technology-driven consumer opportunities, enterprise services, and the industrial internet. Series A and B rounds remain the focus. Lin added that DCM’s success is based on taking a “fewer but better” approach, picking only the most attractive start-ups and providing plenty of assistance once a deal closes.

“Each company receives in-person post-investment support from a managing partner who stays in close contact with the founder. We need to ask the right questions, insist on speaking honestly, and become a strong financial and strategic partner to our founders,” he said.

DCM now has $4.2 billion under management globally. Its China portfolio features the likes of trucking platform Full Truck Alliance, video sharing app Kuaishou, autonomous driving technology developer Pony.ai, big data analytics specialist Sensors Data, software-as-a-service provider Udesk, and B2B auto parts trading platform Haoqipei. Another investee, gay dating app Blued, recently raised $85 million through a US IPO.

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• Topics
• Greater China
• North Asia
• North America
• Fundraising
• Venture
• Technology
• GPs
• DCM-Doll Capital Management
• China
• Japan