Chinese VC Firm XVC Closes $330M For Oversubscribed Second USD Fund

Chinese venture capital firm XVC Venture Capital announced on Tuesday that it has raised about US$330 million for its second fund, "XVC Fund II," with capital commitments mainly from university endowments and family offices in the United States, Europe and Asia.

The new fund, which initially planned to raise US$265 million, was "largely oversubscribed" after the three-month fundraising period since XVC Venture Capital debuted the fund in the second quarter of 2019, said XVC Venture Capital in a statement released on its WeChat official account.

Upon the completion of the new fund, XVC Venture Capital has about US$600 million in assets under management (AUM) across two USD-denominated funds and a RMB-denominated fund, according to the statement.

"The second fund has attracted capital commitments from almost all the institutional investors who poured money into our first fund. A few cornerstone investors, in particular, have raised their stakes by two to three times [through investments in the new fund]," said XVC Venture Capital.

"XVC Fund II also welcomed new limited partners that mainly include top university endowments, non-profit foundations, veteran family offices, and sovereign wealth funds," the company added.

XVC Venture Capital was founded in 2016 by Hu Boyu, a Chinese venture capitalist who had worked as an entrepreneur and engineer for about 10 years before he became an investor. The venture capital firm primarily seeks investment opportunities in the field of technology, media and telecommunication (TMT), where it typically injects between US$1.5 million and US$15 million into each investment.

Prior to XVC Venture Capital, Hu worked with venture capital firm DCM Ventures and Beijing-based Blue Lake Capital, where he singled out multiple unicorns at their early-stage development, including Meicai, a Chinese start-up that helps farmers sell vegetables to restaurants, New York-listed online education group 51talk, Chinese online auction site Youxinpai, and GIF Kuaishou, a GIF-converter which then developed into one of China’s hottest video-sharing and live-streaming apps.

"We think, despite there have been some early positive signals of [the investment returns of] our debut fund, it is still too early to draw a conclusion on the final investment results," said the company. "The relatively-smooth fundraising experience of the second fund is mainly due to limited partners’ recognition of our investment team and strategies, as well as the long-term development prospect of the Chinese entrepreneurial and investment environment."

XVC Venture Capital backed Chinese business to business (B2B) auto parts trading platform Haoqipei in a US$60 million series D round in June, after XVC Venture Capital participated in the firm’s series C round in January and series B round in October 2018.

The company led a series A round in Shanghai-based education platform Hoper and Rising in April, without disclosing the financial details. In February, the firm also poured money into a RMB120 million (US$17.71 million) series A+ round in Chinese kids programming education provider Beijing Smart Walnut Education Technology.

XVC Venture Capital counts Beijing-based online children reading platform Koala Reading and Chinese women’s wear sales and rental platform Abox Yihe among its portfolio companies. Abox Yihe announced in early April to halt its business — about one year after its inception.