China's Source Code raises $567m for latest renminbi fund
Source Code Capital, a Chinese VC firm founded by Yi Cao, formerly a partner at Sequoia Capital China, has closed its fourth renminbi-denominated fund at RMB3.8 billion ($567 million).
It takes Source Code's total assets under management to around $2.8 billion - $1.5 billion in US dollar funds and RMB8.8 billion in renminbi vehicles. The local currency funds have realized exits of more than RMB6 billion. Seven portfolio companies have gone public.
LPs in Fund IV include financial institutions, fund-of-funds, listed corporates, and government guidance funds. More than 70% of the capital comes from existing investors, according to a statement.
Founded in 2014, Source Code closed its debut US dollar fund at $100 million in 2014 and subsequently raised a $40 million annex fund to make follow-on investments. Fund II closed at $150 million in 2015 followed by a third vehicle of $260 million in 2017. It raised $570 million across two funds - one venture, the other growth - last year.
On the renminbi side, Source Code's first and second funds closed at RMB150 million and RMB200 million in 2014 and 2015, respectively. It raised RMB1.6 billion for Fund III in 2017.
The firm - now with more than 80 employees - has established separate teams for venture and growth strategies, though they do collaborate. Growth investments include electric vehicle manufacturer Li Auto, online property platform Ke Holdings, TikTok parent company ByteDance, and B2B fabrics trading platform Baibu. Li Auto and Ke Holdings both listed in the US this year.
Source Code believes opportunities will be driven by three trends: internet plus, whereby start-ups use technology to disrupt traditional industries; smart plus, which leverages artificial intelligence and virtual reality for industry digitization; and global plus, which involves backing companies with a China angle in the international arena.
The firm has invested in more than 200 companies to date, with B2B start-ups becoming more prominent in recent years.
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