Breyer Capital and IDG Capital Partners Raise $1b to Invest in Chinese Startups and Scores 17 Exits, 15 Portfolio Firms Cross $1b Valuations in 2016


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Breyer Capital and IDG Capital Partners Raise $1b to Invest in Chinese Startups and Scores 17 Exits, 15 Portfolio Firms Cross $1b Valuations in 2016

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Silicon Valley investor Breyer Capital and Chinese venture capital firm IDG Capital Partners have reached final close for their $1 billion funds to invest in startups in China in 2016.
Breyer Capital was founded by Jim Breyer, who had led Accel’s investment into Facebook in 2005. The firm has invested in social media, entertainment, media, digital health, and financial technologies. The new fund III from the IDG Capital Fund will focus on investing in sectors such as technology, media & telecommunications, healthcare, energy, and consumer products, both in China as well as in global companies looking to enter the market.

“I have invested in China with the IDG team for over a decade and have been continually impressed by the caliber, creativity, and drive of Chinese entrepreneurs working across a range of industries. China continues to represent tremendous long-term investment opportunities, particularly in companies applying machine-learning and artificial intelligence,” said Jim Breyer, founder and chief executive officer of Breyer Capital.

IDG Capital started operations in China in 1993 and was the nation’s first technology venture capital and private equity investment firm. It has invested in some of China’s biggest tech companies like Baidu, Tencent Holdings, and Xiaomi. More than 100 of its portfolio companies have gone public or been acquired.

Venture funding in China is still strong relative to rest of Asia, despite slowing down of investments. The country’s startups received a cumulative $40 billion in the first three-quarters of 2015, a record high. But funding started to taper off from Q4 ’15, and the trend has continued in 2016, according to data from CB Insights.

Greater China accounted for the second largest proportion of aggregate deal value, at $17 billion, and was the location of seven of the 10 largest deals in the period, according to a Preqin report.

Ride-hailing app Didi Chuxing raised $4.5 billion in various rounds led by Apple Inc., China Life Insurance, BlackRock and Poly Group. Discount e-commerce startup Meituan-Dianping — formed by the merger of Meituan and Dianping Ltd in October 2015 to form China Internet Plus Holdings Ltd — raised $3.3 billion, the largest venture investment in any Internet startup to date.

China’s government has encouraged the growth of venture capital in the last two years. It has backed funds that raised about $220 billion in 2015, a three-fold increase from the year before.

The VC firm shared these numbers in a WeChat post, without divulging its investment returns. According to a report in Chinese media, including this story in China Money Network, IDG had said that around 36 portfolio companies had raised new funding rounds in 2016. These include artificial intelligence start-up SenseTime, home automation firm Rokid, e-commerce company Mogujie, fashion company Magmode, and online video platform Bilibili.

Among the unicorns IDG has backed are Chinese snack food e-commerce platform Three Squirrels, rollable display developer Royole Corporation, logistics company Best Logistics, and mobile app data tracker App Annie.

The three IPOs were Photo retouch app and social networking firm Meitu and flavored duck neck and leisure snack maker Zhou Hei Ya, who both went public in Hong Kong. Shoe-maker Guangzhou Top Score Shoes had also made its IPO debut on the A-share market.

Legend Pictures, a Hollywood film production house that produced “Inception” and “Pacific Rim”, was touted as one of IDG’s strategic sale exits. It invested $12.26 million in the company and was later acquired by Dalian Wanda Group for $3.5 billion in cash in January 2016.

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