Fund focus: Tapping the Alibaba talent seam

When Alibaba Group co-founder Eddie Wu left the company after two decades of services he didn’t move far: Vision Plus Capital, the VC firm he established in 2015, is also headquartered in Hangzhou. Other Alibaba alumni appear to be of like mind. Vision Plus likes to invest in start-ups whose founders came out of the e-commerce giant and an increasing number are choosing to remain in Hangzhou.

“Nearly half our deals are in Beijing but 10-20% are now based in Hangzhou. A lot of Alibaba alumni establish start-ups, and many do it within a certain radius of the Alibaba headquarters – it’s where their family, friends, clients and teams are,” says Yiran Liu, a partner with Vision Plus. “Hangzhou is becoming a very dynamic and entrepreneurial city.”

With ex-Alibaba employees occupying senior positions at the likes of Didi Chuxing and Meituan-Dianping, Vision Plus is betting on the emergence of more breakout stars, having backed more than 10 alumni start-ups out of about 50 portfolio companies. The firm doesn’t poach teams currently working for Alibaba, opting to wait until they have left the business – and increasingly these teams approach Vision Plus once they have come up with an idea.

Proximity helps, but familiarity is the clincher. “We have established a reputation among the alumni so when they think about fundraising a lot of them naturally come to us,” says Liu. “Because our founder has a 20-year history with Alibaba, a lot of entrepreneurs are ex-colleagues.” 

Based on the firm’s recent fundraising activity, LPs believe in this edge. Vision Plus recently closed its second US dollar and renminbi-denominated funds at $250 million apiece, twice what the firm raised for its debut vehicles in 2015. An unnamed technology company remains the anchor investor, while new LPs include sovereign wealth funds, fund-of-funds, and a US public institution. 

The big success story from Fund I is dating app operator Tantan, which was acquired by US-listed Momo earlier this year for $735 million. Vision Plus has also seen the likes of online grocery retailer Miss Fresh and bike-sharing business Ofo go on to raise substantial follow-on rounds.

New retail, enterprise services, and artificial intelligence (AI) are likely to be key themes in Fund II. Vision Plus conducted systematic research into new retail a year ago and has invested in a range of business models, while its portfolio also includes half a dozen enterprise software and cloud computing start-ups as well as a handful of AI pioneers. The other area of interest is healthcare, notably data management systems and health insurance.

“Internet penetration happens a lot faster in some industries than others,” Liu says. “Connecting the patient to the doctor is just the beginning. Over time, big data and AI technologies will have a deep impact on the healthcare value chain.”   

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• Topics
• Greater China
• Fundraising
• Venture
• Renminbi fund
• Technology
• GPs
• China
• Vision Plus Capital
• TMT