Innovation Works closes China internet fund at $180m

Investors include WI Harper, Silicon Valley Bank, Baillie Gifford, Sequoia Capital, IDG-Accel, Foundation Capital, Mohr Davidow, Chunghwa Telecom, Singapore Telecom, Mediatek, Foxconn, New Oriental, SAP, Bertelsmann, Motorola and Autodesk. US and Canadian pension funds are also involved, as are Silicon Valley luminary Ron Conway, Yuri Milner, who is best known for backing Facebook, Zynga and Groupon, and current and former executives from Yahoo, Google, YouTube, Facebook, and Amazon.

WI Harper co-founded the fund with Innovation Works and serves as co-manager.

Lee told the AVCJ China Forum in May that he started Innovation Works after seeing 15 people leave Google China to start their own enterprises. He concluded that he could furnish good ideas with capital and development expertise.

Innovation Works, which launched in September 2009, operates under an incubation-plus-investment model. The incubator identifies companies or individuals with potential and gets them started. Those deemed to have sufficient potential receive early-stage backing from the Innovation Works Development Fund and venture capital firms are brought in as the companies gather momentum.

Lee said in May that 28 start-ups have joined the incubator and 11 received subsequent capital injections and are ready for Series A and B funding. The number of companies in the incubator program has now risen to 34 and nine has obtained Series A backing from third-party VCs.

Current investments show a distinct preference for start-ups targeting the mobile internet space. One company to gain traction is Tapas, a company that is developing a smart phone operating system based on Google's Android technology. It received several million dollars in Series A financing from GSR Ventures in March.

Innovation Works claims to be more involved with portfolio companies than the US equivalents upon which it is part based - a reflection of the fact that Chinese entrepreneurs generally require more mentoring than their seasoned American counterparts. Of these US operations, TechStarts now has a Chinese affiliate called Chinaccelerator, while 500 Start-ups and Silicon Valley Bank recently made their first forays into the country.

"Kai-Fu's Innovation Works is the top very-early-stage fund in China. We are proud to be an investor, and hope that IW will help to produce in China companies on the scale of Facebook, Zynga, or Groupon," Milner said in a statement.

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• Topics
• Fundraising
• Media
• Early-stage
• WI Harper Group
• Sequoia Capital
• IDG Ventures