IDG Capital is poised to raise about $900 million for a new fund focusing on investment in China, a rare feat despite skepticism about the political and market risks of Asia's largest economy.
Most investors are existing supporters of IDG, which has been putting money into Chinese technology firms for nearly three decades, according to people familiar with the matter who asked not to be named because the matter is private. The people said the new fund will focus on technology startups.
The fundraising stems from the fact that venture capital firms in China are struggling to raise cash due to the country s regulatory crackdown on private enterprise and the economic slowdown brought on by the Pandemic. Despite being touted as a primary rival to Silicon Valley, China is still coping with a decline in venture capital investments, despite the stock rally this year.
IDG didn't respond to an emailed statement.
The country's value of deals fell by 40% from a year ago to $34 billion in the first five months of 2022, according to data from the research firm Preqin. Venture capital and private equity funds raised $6.2 billion, a decline of more than 90% compared to the first five months of last year.
In the past year, Chinese tech stocks have taken a beating, driving down valuations in the industry, and spurring risk averse investors who want to allocate money into the country's top investment outlets instead of less established ones.
Since 1993, IDG Capital has been investing in China, making bets on companies like Baidu Inc., SenseTime Group Inc., and Tencent Holdings Ltd. According to the company's website, it invested in more than 1,300 companies, with 400 successful exits.
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