China's Vitalbridge closes Fund II at $275m

The initial target was $250 million with a hard cap at $275 million. Marketing began in May and a first close of $200 million came on 28 July, four days after China announced rules that severely impact private investment in the after-school tuition space. The regulatory uncertainty - the broader technology sector has also been targeted - prompted Vitalbridge to stick to the original hard cap.

All LPs from Fund I re-upped, Jinjian Zhang, the firm's founder, told AVCJ. Fund II has attracted institutional LPs such as foundations, insurance companies, fund-of-funds, and family offices from the US, Europe, and Singapore. US-based Group Health Foundation is among the new investors.

Vitalbridge raised $150 million for its debut fund in 2020, with support from domestic internet entrepreneurs and founders of Chinese companies listed domestically and overseas. Around 50% of the corpus came from institutional players, including Adams Street Partners. The institutional share of Fund II is 80%.

Zhang established the firm after spending approximately seven years at Trustbridge. He participated in investments in children’s storytelling start-up Kaishu Story (also known as Kaishu Jianggushi), flower shop chain Beast, and language learning app Liulishuo, which went on to list in the US.

Vitalbridge focuses on healthcare technology and digital supply chains. It is the largest institutional investor in LM Technology, China’s leading orthodontic institution for children. Other portfolio companies include enterprise reimbursement service provider Maycur, social customer relationship management (SCRM) specialist Dustess.com, and after-sales service platform Publink.

Zhang is also a strong proponent of opportunities in services, arguing that China is at a tipping point. “Every country eventually reaches the stage where services rather than products are the major growth engine. What you buy at a restaurant is not just a meal, it is a service. Such opportunities will appear in all different sectors,” he told AVCJ earlier this year.

“When you move from commodities to services, and you are seeing explosive growth on the demand side, it can be difficult for the supply side to keep up. We bet on the megatrend, which is to leverage disruptive innovation to enable specialists to fulfill services.”

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• Topics
• Greater China
• Fundraising
• GPs
• Venture
• Technology
• Healthcare
• China
• Vitalbridge
• TMT