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GGV
Capital, which has backed high-growth tech companies such as
Airbnb, Alibaba Group Holding Ltd, Pandora Media Inc and Square
Inc, said it will use the new fund to invest in companies making
smartphone and Web-based technology that can serve customers
across the globe.
The $1.2 billion is split between a roughly $900 million fund
that will be used for the majority of GGV's investments in
early- and growth-stage companies, and another $250 million fund
that will primarily be used to back early-stage startups in
China.
Founded in 2000, GGV Capital was one of the first to establish
itself as a true cross-border venture firm, investing in both
U.S.- and China-based startups.
The new fund came on the heels of a record quarter for venture
capital fundraising. Firms raised $12 billion for 57 funds, the
most since the second quarter of 2006, according to the National
Venture Capital Association. Last month, Lightspeed Venture
Partners closed $1.2 billion in new funding and Accel Partners
raised $2 billion.
Many venture firms are eager to close new funds as they
anticipate volatility in the broader economy, and want to make
sure they have cash on hand to invest in startups before funding
freezes up.
"A lot of (venture firms) have to be conservative because they
aren't sure when they are going to raise their next fund," said
Hans Tung, managing partner at GGV Capital.
GGV will start investing from the new fund in June or July; it
still has cash remaining from a $620 million fund it raised in
2014, Tung said.
GGV raised this fund more quickly than previous ones, Tung said
- less than two years after closing its last fund. As startups
demanded more cash at a higher valuation during the past few
years - with a record number of financing rounds soaring past
$100 million - many venture firms depleted their funds more
quickly.
Tung said he expects that will change; venture firms are more
carefully vetting startups before writing a check, taking a
longer time to do deals than they did over the last couple of
years.
"People are a lot more cautious now," he said. "The last two
years were obviously crazy. It's calmed down."
(Reporting by Heather Somerville; Editing by Jonathan Oatis)
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