China VC firm Qiming raises $75m annex fund

The China-focused VC firm closed Fund III at $450 million in 2011 and has since raised a fourth fund of $500 million. A portion of the earlier vehicle was held back for participation in subsequent rounds, but AVCJ understands several of these rounds are larger than anticipated, hence the need for the annex.

In these situations, annex vehicles are raised from the LPs in the related fund and only invest in existing portfolio companies.

The move comes as certain Chinese technology companies are raising ever-larger private rounds at ever-higher valuations. Qiming has benefited from this with early bets like smart phone maker Xiaomi and online listings provider Dianping - making partial exits as strategic investors came into later rounds - but valuation pressure exists at multiple stages.

A company that might have received $5 million in Series A funding a few years ago is now getting $2-3 million in angel capital and then a Series A of $10 million before it has even released a product. In dollar terms, a typical VC firm's entry point has been pushed into what was previously Series B and C territory. This has a knock-on effect on later rounds.

An annex vehicle is distinct from an opportunity fund, which is usually raised in parallel with or shortly after the main fund, and targets later-stage investments, often in existing portfolio companies. This allows the LP to retain exposure to businesses once they have grown beyond the scope of the main fund. The LP base is not necessarily the same across the two vehicles.

Opportunity funds have also grown in popularity as companies stay under private ownership for longer periods of time and raise ever large pools of capital.

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• Topics
• Fundraising
• Greater China
• Venture
• Technology
• China
• Fundraising
• Venture
• Qiming Venture Partners
• TMT