Some of Asia’s biggest technology companies are backing the latest fund from DCM Ventures, extending the corporate venture boom that hit a 15-year high last year.
DCM Ventures announced Thursday it had completed a final close of its primary fund at $500 million and had wrapped up two separate funds: a $100 million vehicle for fledgling startups using emerging platforms such as augmented reality and $170 million for growth deals requiring fatter checks.
Baidu Inc., Gree Inc., Naver Corp., SoftBank Group Corp. and Tencent Holdings Ltd. invested in the 20-year-old firm along with San Diego-based chipmaker Qualcomm Inc., unnamed pension funds, endowments and other more traditional limited partners, DCM said. Venture bets by companies were popular during the first dot-com boom only to vaporize during the bust. The idea has re-emerged in recent years as a part of a larger strategy by mature companies to keep tabs on emerging technologies.
Venture investments by corporate players into startups hit $73 billion in 2015, or almost double the amount the previous year and a high not seen since 2000, according to research group Global Corporate Venturing Analytics. But the real number could be higher. The identities of limited partners and their dollar commitments are rarely disclosed, so indirect investments, like those DCM confirmed as part of its eighth fund, aren’t included in the GCVA data.
“We continue to invest in DCM Ventures because we see it as a critical path for getting to know some of the world’s most interesting early stage technology companies,” Martin Lau, president of Tencent, said in a statement.
The trio of DCM funds, which closed in stages during the past 18 months, will back companies in the U.S., Japan and China. DCM said it will maintain its focus on financial technology, e-commerce, software-as-a service and emerging platforms including virtual reality, artificial intelligence and drones.
Funds recently closed by Sequoia Capital, IDG Ventures and Breyer Capital show an appetite remains to back Chinese startups, but not at the level of the record highs of 2015.
China Online Education Group, backed by DCM and Sequoia Capital, made its initial public offering last month, the first such Chinese tech startup to go public in the U.S. this year.At $46 million the offering was small, raising questions about the larger exit environment for Chinese startups.
DCM said it distributed $1.5 billion to its investors during the past three years thanks to nine acquisitions and four IPOs: 58.com Inc., KakaoTalk, Tuniu Corp. and Vipshop Holdings Ltd.