Funds: GGV continues fund size scale-up

GGV Capital’s annual general meeting – held last week, shortly after the firm closed its most recent China-US fund – offered a snapshot of 18 years of tech investing in China. The attendees ranged from Joe Tsai, co-founder and executive vice chairman of Alibaba Group to Fang Zhai, CEO and co-founder of e-commerce startup Xiaohongshu, which is now valued at more than $3 billion, to Yan Li, CEO of recently listed scooter manufacturer Niu Technologies. All have been backed by GGV.

The firm has invested in 51 companies across consumer and new retail, social media, and digital services that have gone on to achieve valuations of $1 billion or more, among them smart phone maker Xiaomi, news aggregator Jinri Toutiao, and ride-hailing platform Grab. Of the 51, half of these were at the Series B stage or earlier when the GP first invested. A similar number have gone public.

GGV has returned more than $1 billion to investors since the start of 2017, and on the back of these distributions, the firm has raised $1.88 billion for its seventh fund – up from $1.2 billion for the previous vintage. Total assets under management are $6.2 billion, including a debut renminbi fund of RMB1.5 billion ($236 million), which closed earlier this year.

The new fund has the same structure as its predecessor: a core venture fund and a top-up pool of $1.36 billion; an early-stage vehicle of $460 million; and a $60 million entrepreneurs fund through which members of the GGV network can take part in deals. 

“One of the highlights is that the early-stage vehicle, GGV Discovery II, has almost doubled in size because of the greater attention it got due to the good performance of our previous funds,” says Jixun Foo, a managing partner at GGV. “Another reason is that early-stage investment opportunities still abound in China, so we’d like to increase the amount of capital and invest more in this space.”

The firm claims that its funds have consistently performed in the top quartile for venture capital and private equity globally, generating an IRR of more than 25%. According to Oregon State Treasury, as of March, the 2011 vintage Fund IV had delivered a 2.34x multiple and a 20.7% IRR. Fund V, which launched in 2014, was on a 2x multiple and a 30.2% IRR. 

The new fund has yet to make its first investment because the previous vehicle isn’t yet fully deployed. There are three main themes: the application of artificial intelligence to traditional industries; companies with business models that have the potential to be replicated globally but require localized teams to handle execution; and software and services that boost efficiency in traditional businesses.

“Traditional industries such as transportation, logistics, education and finance are in the process of being revolutionized, partly by AI, and we will dig deeper into this,” Foo says. For example, GGV has invested in BlackLake Technology, which supplies data collection, visualization and analytics to factories via a mobile app.   

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• China
• GGV Capital
• TMT