Interest in Chinese tech startups to grow as exits become easier: Shaw Wang, Unity Ventures

Shaw Wang, founding partner at Chinese early-stage venture capital firm Unity Ventures

Chinese venture capital firm Unity Ventures is preparing ammunition for its first $100-million US dollar fund as it foresees heightened investment into early-stage technology startups following Beijing’s listing reforms that will make exits easier for their investors.

Beijing-based Unity Ventures, which primarily bets on startups at the angel and pre-Series A stages, already reached the first close for the debut dollar fund at tens of millions of US dollars before the Lunar New Year. Limited partners (LPs) include China’s Wu Capital, a family office that manages money for real-estate tycoon Wu Yajun.

The new vehicle kicked off fundraising in late 2019 and is expected to close in the second half of 2020 at $100 million.

China’s Nasdaq-style STAR Market and Beijing’s proposed reform of the ChiNext board will make it “substantially easier for investors to exit from their high-tech portfolios,” said Shaw Wang, founding partner of Unity Ventures in a phone interview with DealStreetAsia.

Investment interest in Chinese technology startups at Series A round and after will increase with the formation of exit alternatives. This will contribute to “a less difficult development path for high-tech companies that rely heavily on massive capital and talent investment to grow in the early stage,” he said.

The venture capitalist, formerly a founding member of Nasdaq-listed Chinese search engine giant Baidu, created Unity Ventures in September 2011 and anchored four RMB-denominated funds with nearly 2 billion yuan ($281 million) in assets under management (AUM).

After deploying about 1 billion yuan ($141 million), the company has formed a portfolio of over 200 startups predominantly at angel round and Series pre-A round, as well as a fraction at Series A round.

Unity Ventures posted a track record of over 40 per cent in average internal rate of return (IRR) in its previous three yuan funds, in what Wang referred to as a symbol of maturity for his investment team to manage a dollar fund with a larger capital pool.

“USD-denominated funds are of crucial importance since about 60 per cent of subsequent investments in our portfolio companies are from dollar funds,” said Wang. “We are able to get a hold of their preferences, which makes it logical for us to run a U.S. dollar fund of our own.”

Shaw Wang shared with DealStreetAsia the fundraising updates of Unity Ventures’s first dollar fund and investment strategies, as well as his insights into a transition of consumer behaviours amid the COVID-19 outbreak, and how Beijing’s IPO reforms are shaping up exit potential for investors behind Chinese technology companies. The interview was conducted in Chinese. Below are the translated and edited excerpts:

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.