Photographer: Qilai Shen/Bloomberg

China’s IDG, Breyer Capital Raise $1 Billion to Back Startups

  • Investments target media, tech, health care, energy, consumer
  • Appetite still exists for China even as deal activity slowed

Chinese venture capital firm IDG Capital Partners and Silicon Valley investor Breyer Capital raised a $1 billion fund to back startups in China, showing there’s still appetite for significant investment in the country even as overall funding has slowed.

The new IDG Capital Fund III will invest in technology, media, health care, energy and consumer-product startups in China, as well as companies based elsewhere that are looking to enter the country. The fundraising by IDG and Breyer Capital extends a partnership between the two firms that began more than a decade ago, Jim Breyer, co-founder and chief executive officer of the eponymous firm, said in a statement Tuesday.

After investors plowed a record $40 billion into Chinese startups in 2015, deal activity began to taper off in the fourth quarter and into the first three months of this year, the latest for which data is available from CB Insights.

Still, some of the biggest venture-capital funding rounds this year involve Chinese companies, including a $4.5 billion investment in ride-sharing company Didi Chuxing and $3.3 billion for Meituan-Dianping, an e-commerce startup. Chinese Premier Li Keqiang is leading a big push to get into the venture capital business as a way to decrease the country’s dependence on heavy industry. China’s government-backed venture funds raised about 1.5 trillion yuan (about $220 billion) in 2015, tripling the amount under management in a single year.

“China continues to represent tremendous long-term investment opportunities, particularly in companies applying machine-learning and artificial intelligence to revolutionize a multitude of industries, including financial services, health care, and social media, to name just a few," Breyer said.

As an early venture capital firm in China, IDG Capital backed some of China’s biggest tech companies, including Baidu Inc. and Tencent Holdings Ltd. Breyer led Accel Partners’ investment in Facebook Inc. in 2005 before starting Breyer Capital.

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