IDG Capital, Breyer raise $1b to invest in Chinese startups amidst slowing investments

Chinese venture capital firm IDG Capital Partners and Silicon Valley investor Breyer Capital have reached final close for their $1 billion fund to invest in startups in China.

The new fund, IDG Capital Fund III, 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 XiaomiMore than 100 of its portfolio companies have gone public or been acquired.

“As a long-time business partner and personal friend, Jim has been an integral advisor to IDG Capital Partners for over a decade, and he will continue playing a leading advisory role in the new fund,” said Hugo Shong, founding general partner of IDG Capital Partners.

Breyer Capital was founded by Jim Breyer, who had led Accel’s investment into Facebook in 2005. The firm invests in social media, entertainment, media, digital health, and financial technologies.

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 this year, according to data from CB Insights.

Still, 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.

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Chinese deals firm Meituan-Dianping raises $3.3b in largest VC round in internet startups
Global VC deals touch $40b with China on verge of overtaking N America: Preqin