China's Source Code raises $1.1b renminbi fund
Chinese venture capital firm Source Code Capital has raised RMB7 billion ($1.1 billion) for its fifth renminbi-denominated fund after approximately three months in the market.
It comes seven months after the firm closed its latest US dollar vehicle with $1 billion in commitments. It is also 12 months since Source Code raised RMB3.8 billion for its fourth renminbi fund.
New investors in the latest vehicle include about 10 insurers and national government guidance funds such as the China SME Development Fund, according to a statement. Oriza FoFs is among the re-upping investors.
Founded in 2014 by Yi Cao (pictured), formerly of Sequoia Capital China, Source Code now has RMB35 billion in assets under management (AUM). The firm - now with more than 100 employees and seven partners - has established separate teams for venture and growth strategies, though they do collaborate.
The first US dollar fund closed at $100 million in 2014 and was later joined by a $40 million annex fund for follow-on investments. Fund II closed at $150 million in 2015 and a third vehicle of $260 million came two years later. This was followed by a $570 million fund in 2019.
Source Code's first three renminbi funds came in at RMB150 million, RMB200 million, and RMB1.6 billion, respectively. The local currency vehicles have generated realizations of more than RMB6 billion, with seven portfolio companies going public.
The firm has invested in more than 300 companies to date and 80% of its deals are classified as early stage. 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.
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