Hong Kong's MindWorks seeks $150m for Fund IV

The hard cap will be $200 million, according to a source familiar with the situation. MindWorks has previously sourced capital solely from LPs in Europe and Greater China, including the Hong Kong government’s Innovation & Technology Fund (ITF). This remained the case even when stepping up in size for Fund III, which closed at $120 million in 2018. Fund IV will be the first marketed to US LPs.

The firm pursues a pan-Asia early-stage strategy, focusing on Greater China and Southeast Asia. While China deals are typically Series A rounds, in Southeast Asia, MindWorks tends to appear at the Series B stage, backing start-ups with proven business models that derive from China and the West. The GP leverages its experience and networks in both markets to support growth.

MindWorks is best known as an early backer of online logistics platform Lalamove, which launched in Hong Kong and then expanded into Southeast Asia before venturing into China. The VC firm is the second-largest shareholder after the founder, having participated in all six funding rounds since 2015, including the $300 million Series D last year that featured the likes of Hillhouse Capital, Sequoia Capital China, and Shunwei Capital. Lalamove is one of Hong Kong’s few unicorns.

MindWorks has exposure to the company across multiple funds but sold the Fund I position in the most recent round. It is one of two significant exits from Fund I, which had generated distributions to paid-in (DPI) of 19.3x as of September. The gross multiple and gross IRR were 21.3x and 51.7%, respectively. The other exit is Dolphin Browser, an early Android web browser. Online gaming platform Changyou bought a 51% stake in the business for $91 million in 2014.

The gross multiple on Lalamove investments across the three funds is 76.2x, though this trails the 232.6x multiple on Qupital, which claims to be Asia’s largest accounts receivable exchange. The company provides financing to small-scale vendors – most of them from China – who rely on cross-border e-commerce platforms like Amazon. Qupital lends money against unpaid invoices, using a big data-enabled risk assessment model to complete credit assessments within three days.

The start-up’s most recent funding round in early 2019 saw Alibaba Group’s Hong Kong Entrepreneurs Fund, CreditEase’s fintech fund, and MindWorks contribute $15 million. MindWorks provided angel funding in 2016.

MindWorks is also invested in Hong Kong supply chain compliance platform ICW, Taiwan travel and activities marketplace KKday, Singapore property portal 99.co, China’s ABC Fintech, Hong Kong serviced living community Dash, China dental insurance player PowerfulDental, cross-border payments provider Ksher, hotel management software provider uBingo, and Chinese fresh produce e-commerce platform Miss Fresh.

The VC firm was established in 2013 by David Chang and Joe Chan and now has approximately $600 million in assets under management. Fund II, raised in 2016, had a gross multiple of 6x and a gross IRR of 42.2% as of September. The comparable figures for Fund III are 1.4x and 9.2%. In addition to its funds, MindWorks is a founding partner of Asia-focused accelerator program Betaron.

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• GPs
• Southeast Asia
• Hong Kong (China)
• Asia
• MindWorks Ventures
• TMT