Monolith closes debut China VC fund on $264m
Sequoia Capital China spinout Monolith Management has closed its debut venture capital fund at USD 264m, surpassing the hard cap of USD 250m.
The final close came in late February, according to two sources close to the situation. The initial target was USD 200m and a first close of USD 185m came in January.
Monolith describes itself as a manager focused on growth companies across public and private markets in areas such as software, consumer, and healthcare.
The firm was established by Xi Cao in 2021 after he left 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.
Some investors in a hedge fund transferred a portion of their commitments to the venture capital vehicle. Other LPs in the new fund include US endowments, Asian family offices, and fund-of-funds.
Cao began his career at Tencent Holdings and Kingsoft Software, entering the investment industry in 2011 with Cowin Capital. He moved to Sequoia two years later and became the firm’s youngest partner in 2017. He 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 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.
About USD 14.1bn was committed to US dollar-denominated China funds in 2022, exceeding the 2021 total of USD 9bn, according to AVCJ Research. However, three-quarters of the capital went to funds raised by Sequoia and Qiming Venture Partners. Just over USD 1bn has been raised in 2023 to date.
The renminbi space is more active, with USD 3.4bn raised to date, compared to USD 7.3bn for the whole of 2022.
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