Monolith sets $250m hard cap for China fund
Monolith Management, an investment firm established by Xi Cao, formerly a partner at Sequoia Capital China, has set the hard cap at USD 250m for its debut China venture capital fund.
The initial target was USD 200m and a first close of USD 185m came in late January, according to two sources familiar with the situation. LPs include US endowments, Asian family offices, and fund-of-funds. In addition, some of the investors in a hedge fund Monument raised are transferring a portion of their commitments to the VC vehicle. Monolith did not respond to a request for comment.
Cao established the firm in 2021 after leaving Sequoia. He teamed up with Timothy Wang, previously a partner at Boyu Capital who concentrated on long-short public equities, and they raised a USD 500m technology-oriented hedge fund. Monolith describes itself as a manager focused on growth companies across public and private markets in areas such as software, consumer, and healthcare.
Cao began his career as a product manager at Tencent Holdings and then served as director of operations at Kingsoft Software. He switched to investment by joining Cowin Capital in 2011 and moved to Sequoia two years later. He became Sequoia’s youngest partner in 2017 and was subsequently involved in setting up the firm’s China seed fund.
The two deals Cao is most readily associated with are game live-streaming service Douyu International and short video platform Kuaishou. Sequoia invested in Douyu’s Series A in 2014, a year after it was founded, and remained through a US IPO in 2019. Kuaishou was added to the portfolio in 2015 via a Series C. Sequoia re-upped several times ahead of a Hong Kong listing in 2021.
VC fundraising in China has been challenging since 2021, which saw a government crackdown on certain parts of the technology sector and questions being raised about the viability of offshore IPOs.
Approximately USD 13.9bn was committed to US dollar-denominated China funds in 2022, exceeding the 2021 total of USD 9.1bn, according to AVCJ. However, three-quarters of the capital went to funds raised by two managers, Sequoia Capital China and Qiming Venture Partners.
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