China’s XVC raises $274m for third US dollar fund

LPs include university endowment funds, non-profit foundations, family offices, and sovereign wealth funds. Almost all institutional investors for Fund I and Fund II re-upped.

XVC closed its debut US-dollar fund in 2017 on USD 115m, while Fund II closed in 2019 at USD 268m. Following its predecessors, Fund III will focus on early and growth-stage investments related to long-term structural changes such as industry digitalisation, supply chain upgrades, consumer generational changes, retail channel upgrades, and media consumption habit change.

The ticket size is around USD 1-30m. XVC describes its strategy as “sniping style,” meaning it invests in a limited number of companies seen as having outsized potential. It also claims to have streamlined decision-making processes and value-add post-investment services.

Founded in 2016, XVC maintains a small investment team, stressing the independent decision-making of its team members. This is said to differentiate it the firm from the majority of Chinese VC firms, known for promoting collective decision-making.

Investment priorities include whether a project has real and large demand, and whether a start-up has a corporate culture of self-enhancement and self-evolution. The quality of staff is considered as important as the business model and evaluated with various founder judgment models.

"All great companies are first and foremost great organisations, and there are almost no exceptions. XVC is all about finding founders who can build great organisations and accompany them to grow,” said Boyu Hu, a partner of XVC.

XVC has invested in more than 40 companies in the past five years, including contact lens brand Moody, enterprise service provider ONES, and seasoning brand Lihe Taste.

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• Topics
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