China VC player Source Code to raise $1b
Source Code Capital, a Chinese venture capital firm founded by Yi Cao (pictured), formerly of Sequoia Capital China, is set to raise $1 billion across two funds.
LPs were earlier told the vehicles were 1.7x oversubscribed and a had cap had been set at $950 million, with a planned final close date of March 15, according to a source close to the situation.
The venture capital firm made separate regulatory filings on March 12 indicating that Source Code Venture Fund V and Source Code Growth Fund II have targets of $420 million and $580 million, respectively. The $50 million discrepancy between information given to LPs and the stated targets may represent the GP commitment.
Source Code raised $570 million for its previous vintage in 2019. This comprised $290 million for venture and $260 million for growth, plus a GP commitment of $20 million.
Founded in 2014, the firm 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 and a third vehicle of $260 million came two years later.
Source Code currently claims $1.5 billion and RMB8.8 billion in assets under management. On the renminbi-denominated side, its fourth local currency fund closed at RMB3.8 billion ($567 million) last October. It raised RMB150 million, RMB200 million and RMB1.6 billion for the first three vehicles.
The firm has invested in more than 200 companies to date, with a focus on early and growth-stage deals for new economy businesses. B2B start-ups have become more prominent in recent years.
Source Code believes opportunities are driven by three trends: an "internet plus" strategy, whereby start-ups use technology to disrupt traditional industries; "global plus," which involves backing companies with a China angle in the international arena; and “AI plus,” which leverages the emergence of intelligent technology such as artificial intelligence and virtual reality.
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.
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