Fund focus: WI Harper sticks to small scale

Ninety-six LPs have committed capital to WI Harper Group's latest Asia fund, which has closed at $175 million, according to its US regulatory filing. Remove the $40 million contribution from Taiwan's National Development Fund and the average investment is less than $1.5 million. By comparison, Morningside Venture Capital closed its fourth China fund last year at $660 million, with 35 LPs disclosed in the filings.

"We are very different from a lot of other Silicon Valley firms. Whereas they tend to have 2-3 very large endowment-like investors, we have 50-100 LPs per fund. That speaks to our network," says Edward Liu, a partner at WI Harper. "We market as an institutional fund, we have institutional investors, and we have formal investment committees, but in some respects it is run like a family office."

High net worth individuals, family offices and fund-of-funds feature strongly in WI Harper Fund VIII. Having a large number of small-scale investors means there is minimal interference, but at the same time, fundraising can be challenging: 30-50% of WI Harper's LP base must be replaced in each new fund.

While other GPs with a China or China-US focus have seen substantial jumps in fund size in their most recent vintages - as top-up funds are routinely bolted onto traditional venture vehicles - WI Harper is wary of leaving its sweet spot. The target for Fund VIII, which launched in 2014, was $150 million, a $40 million increase on its 2009 vintage predecessor. "We don't want to be under pressure to put money to work when the market isn't doing so well and is in consolidation mode," Liu explains.

The bulk of the Fund VIII portfolio will continue to be Series A rounds of $1-5 million for start-ups based in the US and Greater China. The seed program launched alongside Fund VII, which makes commitments of $100,000 to $1 million, remains and is expected to account for 10-20% of the overall corpus. Some change is likely in geographical allocations: Fund VII was 70% Asia and 30% US, but Liu thinks Fund VIII will be around 60-40. This reflects the firm's concentration on quality management teams, and on founders who understand the China market and what WI Harper can do there.

Liu cites app search engine Quixey, which received Series A round backing from WI Harper in 2011, as an example. The GP introduced management to hardware manufacturers, brokered deals for the company's software to be pre-installed on devices, and then helped line up Alibaba Group as lead investor in the Series C round.

"We are very hands-on with our entrepreneurs. When they come over here we set up the road shows, do all the PR, and help with fundraising," he says. "You get these mom and pop shops and the value they bring to the table isn't great. They say they are hands-on in pursuing the cross-border model, but do they follow through? Over time it shows."

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• Topics
• Greater China
• Fundraising
• Technology
• Venture
• WI Harper Group
• TMT
• China
• USA