Fund focus: Long Hill aspires to specialization

Xiaodong Jiang led the China investing practice at US-based New Enterprise Associates (NEA) for about a decade, opening the firm's offices in Shanghai and Beijing. Earlier this year, he started a new chapter in his career with the launch of Long Hill Capital, in conjunction with another now ex-NEA colleague, Bo Jiang. However, the tie wasn't completely severed: NEA is among Long Hill's five largest LPs.

The Shanghai-based GP recently closed its debut fund at $125 million after six months in the market. Institutional investors - including US pension funds, insurance companies, the International Finance Corporation and fund-of-funds such as Asia Alternatives - account for 90% of the corpus. Within the remaining 10% are commitments from seven existing NEA partners.

"Through our conversations with LPs, my sense is that investors are getting much more cautious as to how the VC market will evolve in China, and what kind of new managers and strategies are likely to succeed in the next 10 years. And they are really concerned about liquidity, as we are," says Jiang. "Having said that, it isn't like all the money has gone away."

Long Hill is a first-time fund manager, but Jiang can point to a lengthy track record that features success stories like CITIC Pharmaceutical, WeDoctor, Hygeia Medical Services and Ele.me. The sector focus for the new vehicle is early-stage healthcare and consumer services.

"The Chinese start-up landscape has matured compared to 10-15 years ago. Entrepreneurs are savvier, while sector opportunity is much bigger and more diverse. Focusing on consumer and healthcare services allows us to go deeper into sectors and leverage our expertise and networks. We don't want to invest in everything; we want is to be the best partner to entrepreneurs within our areas of focus."

For instance, within healthcare there are two areas of interest: new technology and service delivery. Long Hill has chosen the latter as its main focus, with a view to supporting technology-enabled start-ups that can address the supply-demand imbalance caused by shortage of quality doctors and structural inefficacy of the current delivery system. "In other words, it doesn't matter you have the world's leading therapeutics - in China, the problem is that you don't even have good doctors to prescribe them," says Jiang.

He is particularly optimistic about the application of artificial intelligence (AI) and machine learning (ML) technology in healthcare, which will help professionals build strong databases and make more efficient and accurate medical decisions.

Asked about the affiliation with NEA, Jiang says he expects the US-based firm to continue building its presence in China, although the strategy has evolved. NEA is targeting a combination of direct investments and co-investments alongside local affiliates. Long Hill is part of this club.

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• Topics
• Greater China
• Venture
• Fundraising
• Technology
• Consumer
• China
• TMT
• New Enterprise Associates
• Long Hill Capital