China’s FutureX closes Fund II on $150m

The close brings the firm's assets under management to around USD 1bn, according to two sources close to the situation.

FutureX was founded in 2018 by Cynthia Zhang, who previously launched the private equity investment business of China Asset Management and spent the best part of a decade running the unit. Before that, she worked at Merrill Lynch and UBS.

FutureX closed its first US dollar fund in 2019 on USD 120m. The firm also manages two renminbi funds with combined assets of nearly CNY 1.5bn (USD 207m) and several project-specific vehicles.

The US dollar strategy is largely focused on Chinese technology companies looking to go global, while the renminbi funds are mainly interested in domestic technology infrastructure and import substitution, the sources said.

Standout investments include social media behemoth ByteDance, digital services platform Meituan, electric vehicle manufacturer Nio, software developers PingCap and Kingsoft Cloud, 3D printing player UnionTech, and chip designer SmartSens.

FutureX recently led a CNY 775m Series B for open-source software platform Gitee. The company was identified as a potential investee in 2021, but it had recently closed a round and wasn't looking for additional capital. Zhang initiated a discussion on how Gitee could develop further, suggesting that the company would be better placed operating as an independent platform.

At the time, Baidu was the majority shareholder. The Series B saw its stake fall from 51.54% to 14.04%.

FutureX researched the open-source software space after backing PingCap. Gitee stood out as a Chinese equivalent to Github. Its user base comprises 10m programmers, covering 90% of the Chinese market and 20% of the international market.

“Gitee’s team combines global vision and local know-how and has developed into a platform-type enterprise. It’s not easy to find a good platform-type company, which is why we joined four consecutive rounds for ByteDance, one of China’s most successful consumer-tech platforms,” said Zhang.

China fundraising is especially challenging right now as LPs move to risk-off mode and many US investors scale back commitments to the country amid geopolitical tensions.

Approximately USD 21.5bn was committed to US dollar China funds last year, up slightly on 2021, but HongShan (formerly Sequoia Capital China) and Qiming Venture Partners together accounted for nearly 60% of the total. In the first half of 2023, USD 5.4bn was raised across half a dozen closes.

Vertex Ventures China recently closed its fifth fund on USD 390m, sourcing all the capital from Europe, Southeast Asia, and China-headquartered LPs.

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• Topics
• Greater China
• Fundraising
• GPs
• Technology
• Growth
• China
• FutureX Capital
• Fundraising