China-based venture firm BAI Capital announced a new $700 million fund aimed at claiming a slice of the country’s startup ecosystem, TechCrunch reported.
This is the first time BAI Capital has closed a fund in U.S. dollars. It’s also the first time the firm grew its fund through external limited partnerships. The funding will go toward technology in automation, SaaS products, the retail sector, Web3 and the metaverse.
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BAI Capital was founded in 2008 by German businessman Carl Bertelsmann. Since then, it has invested in more than 200 companies, nearly 20 of which IPO’d and 40 that achieved unicorn status, according to the company. In 2022 it invested in a handful of startups in the enterprise and SaaS space, such as Shanghai-based Cygnus Semi, a chipmaker for 5G and Internet of Things technology.
Investors look toward China
Investors in the West are eyeing China’s private market. This comes even as the risk-adverse government continues to impose restrictions in an attempt to quell anticompetitive behavior that nonetheless lowers profitability projections among thriving companies in the region.
“With its unique positioning advantage in the increasingly complex global political and economic environment, it will further open up the successful path of Chinese enterprises in international competition and cooperation, and serve entrepreneurs with a global mind,” founding and managing partner Long Yu said in a statement posted on WeChat.
China-based startups raised $106 billion in 2018, according to Crunchbase data, but took a dip the following two years by only raising $60 billion each year. Last year, startups in China raised $86 billion, but dealflow slowed in 2022, keeping in line with global trends.
BAI Capital’s fund comes shortly after Sequoia Capital China announced its $8 billion fund in March. Sequoia Capital China continues to be the most active investor in China, per Crunchbase data, investing in the highest number of companies in 2021 and so far in 2022. Another large investor, Qiming Venture Partners, also raised $700 million in July.
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