Joy sets modest target for China VC fund - update

The venture capital firm is looking to raise USD 300m for its fourth fund, according to two sources close to the situation. Fund III closed on USD 391m in 2019 and Joy raised an additional USD 327m in commitments for a debut growth vehicle. There are no plans for a successor vehicle, the sources said. One of them noted that "market conditions are totally different from 2019.”

Joy announced it had raised CNY 4bn (USD 597m) across US dollar and renminbi funds, but this is an approximate figure. The renminbi vehicle closed on around CNY 1.5bn last year. No information was given as to the vintage of the renminbi fund or the size of the first close on the US dollar fund.

China PE and VC managers raised USD 20.1bn for US dollar funds last year, consistent with the average for the previous five years. However, more than 70% of the capital was raised before the end of June. Around this time, US-listed Chinese concept stocks underwent a significant correction, driven by regulatory crackdowns and uncertainty over offshore IPOs.

Fundraising for 2022 to date is USD 7.3bn, according to AVCJ Research. VC managers alone have attracted USD 1.7bn.

Other GPs have been adapting their strategies accordingly. Legend Capital recently decided to exclude the consumer-facing segment from its latest China technology, media, and telecom (TMT) fund. The target for the vehicle is USD 400m; this compares to USD 500m raised in the previous vintage.

Joy was established in 2015 by Erhai Liu, who previously led TMT investments at Legend. The firm closed its debut fund US dollar fund on USD 200m in 2016 and followed up with USD 319m for Fund II. Most of the participating LPs in Fund IV are institutional players with existing exposure to the GP.

There is a preference for Series A and B rounds across the TMT, automotive, and entertainment spaces, and also in internet integrations within traditional industries. Joy expects to be active in robotics, artificial intelligence (AI) and internet of things (IoT) crossovers, and health and nutrition, and it will explore metaverse opportunities.

New infrastructure has emerged as another key theme. Liu previously told AVCJ that new technologies are characterised by specific applications, such as web browsing, email, and file transfer in the internet era and voice and facial recognition and autonomous driving in the AI era.

"That’s just the first stage. In the second stage, new technology becomes the new infrastructure, leading the transformation of all industries,” he said. “Changes to the planet caused the extinction of dinosaurs, right? We need to identify new species that can adapt to the new environment.”

Standout past and current portfolio companies include electric vehicle manufacturer Nio, bike-sharing business Mobike, car servicing player Tuhu, gas station platform Newlink, autonomous driving technology developer Momenta, LiDAR specialist Innovusion, automation solutions provider Megarobo, and coffee shop chain Luckin Coffee.

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• Topics
• Greater China
• GPs
• Fundraising
• Technology
• Venture
• Renminbi fund
• Joy Capital
• TMT
• deep-tech
• Fundraising