Qiming Venture Partners, a venture capital (VC) firm that has backed some of China’s biggest tech companies like smartphone maker Xiaomi, is reportedly in talks with US institutional investors in an attempt to raise over $1.2 billion for a new fund.
The update was first reported by The Information on Tuesday, citing three people familiar with the matter. Qiming declined to comment on the reported fundraising plan when contacted by DealStreetAsia.
Qiming’s previous US dollar fund, Qiming Venture Partners Fund VII, was closed in November 2020 with $1.2 billion in total capital commitments from university endowments, foundations, family offices, and pension funds. Last January, it secured the final close of its latest Chinese yuan Fund VI at 2.852 billion yuan ($448.1 million).
The reported fundraising of Qiming could be a sign of Western limited partners’ (LPs) confidence in investing in China amid Beijing’s tightening of regulations targeting big tech and the ongoing Sino-US political tensions.
In general, fundraising by VC firms that invest US dollars in Chinese tech startups has been poor last year. As of December 20, 2021, such firms have raised $4.2 billion in total, a decrease of 65% from the entire 2020. The number of new funds has also dropped two-thirds to 24, according to data provider Preqin.
But top-tier VC players seemed to be more immune to these external shocks. 5Y Capital, which manages about $5 billion across USD and RMB funds, raised over $1.7 billion in April 2021 for its early- and growth-stage US dollar vehicles. Formerly known as Morningside Venture Capital, the firm has backed AI software provider SenseTime, whose Hong Kong listing last month was scaled down after the US Treasury banned the country’s institutional investors from participating.
Alibaba-backer GGV Capital, a global VC firm that also invests in China, announced in January 2021 the closing of four new funds at a combined $2.52 billion. Source Code Capital, a dual-currency fund manager that invests across robotics, intelligent manufacturing, and other sectors, raised $1 billion last April to bring its total USD-denominated assets under management (AUM) to $2.5 billion. Food delivery giant Meituan and e-commerce platform Pinduoduo’s backer Lightspeed China Partners held the final closing of two new funds at $920 million — its largest fundraising to date — in December.
It is now Qiming’s turn to retest Western LPs’ long-term commitment to making investments in China. Founded in 2006, Qiming has $6.2 billion of AUM across 10 US dollar funds and six Chinese yuan funds with offices across mainland China and the US.
It has backed over 430 companies, including Meituan and video site Bilibili, both of which suffered stock price declines due to China’s regulatory crackdown. Its portfolio companies also include ByteDance, the China-based owner of short-video app TikTok that was said to be aiming for a Hong Kong listing in 2022 after months of efforts trying to address Chinese regulators’ data security concerns, according to three sources cited by a Financial Times report in August 2021.
Qiming, which focuses on the TMT and healthcare sectors, said on its website that about 70% of its deals were made at the early stage of Series A and Series B. Its health investments have borne fruits with the IPOs of firms such as biopharmaceutical firm Gan & Lee Pharmaceuticals, clinical trial & research firm Hangzhou Tigermed Consulting, and vaccine maker CanSino Biologics in recent years.