Exclusive | DCM Ventures Splits Up Too, But Still Committed to Supporting Global Chinese Entrepreneurs

By Zhiyan Chen

Edited by Jing Liu

"An Yong Waves" has learned exclusively that DCM Ventures is spinning off its angel and seed fund team into a new, independent investment firm led by Managing Partner Osuke Honda. DCM Ventures stated that restructuring its investment operations aims to "better meet LP expectations" and stay true to its core principle of "investing in and building startups that represent the future of technology." Managing Partner Hurst Lin said: "In the face of an ever-changing venture capital industry, the core principles we uphold will provide a solid foundation for building strong portfolios now and in the future."

According to "An Yong Waves," this spin-off only involves the newly raised approximately $100 million A Fund IV, and has no impact on DCM's main fund in management or the first three A Funds. Going forward, DCM's core investment decision-making will continue to rest with David Chao, Hurst Lin, and Ramon Zeng, while its existing investments in Japan will be taken over by successors.

In recent years, amid broader shifts in the environment, several global investment firms have split their regional brands. However, unlike Sequoia and GGV, which made their regional operations fully independent, DCM chose to spin off only its angel and seed fund team while keeping its fund operations globally integrated and cross-border.

Several factors drove this decision. On one hand, Japan's economy has shown signs of rebounding in recent years, creating new opportunities at the seed stage that demand faster response times and more independent decision-making. According to "An Yong Waves," A Fund IV had promised LPs during fundraising that "70% of capital would be deployed in Japan," with Osuke Honda as its core lead. Public information shows that Honda was born in Japan and spent his childhood between the US and Japan. Before becoming an investor, he held multiple positions at Mitsubishi Corporation, the world's largest trading company. He has been with DCM Ventures for many years, rising from senior investor to partner in July 2010. Going forward, his new investment firm (name to be announced in 2025) will focus on angel and seed-stage startups, with its debut fund expected to deploy the majority of its capital in Japan.

On the other hand, this "counterintuitive" move also relates to DCM's own structure and team composition. In 1996, DCM Ventures was founded in Silicon Valley by Dixon Doll and David Chao. In 2006, Hurst Lin left his post as COO of Sina to launch and lead DCM China. This Chinese-American "sniper" investor went on to rack up a string of classic hits during the mobile internet wave, including Kuaishou, 58.com, Vipshop, and GigaCloud.

Though China generated outsized returns for DCM, the firm — rooted in Silicon Valley DNA — never imposed strict geographic boundaries on its investments, and its lead GPs maintained a globally traveling work style. At the same time, DCM's extremely lean staffing made regional independence practically impossible. DCM has long been known in China as "the VC with the highest input-to-output ratio" — its investment team has consistently stayed under ten people; it makes roughly ten investments per year; it has no dedicated post-investment team, with GPs handling portfolio support directly. For over a decade, DCM operated on a Benchmark-style "sniper fund" strategy with close coordination across offices worldwide.

In 2020, we exclusively reported that DCM Ventures had raised its largest-ever $880 million fund. Currently, both its $780 million main fund DCM IX and $100 million A Fund III remain in their investment periods. But DCM has been notably low-profile these past two years, rarely disclosing specific investment activity. According to "An Yong Waves," the firm has maintained its previous investment pace in China and continues seeking opportunities with Chinese entrepreneurs building globally.

How to keep moving forward with a global posture in an "ever-changing venture capital industry"? DCM Ventures is searching for its answer.

Appendix: DCM Ventures Statement on Spinning Off Its Angel and Seed Fund Team

Menlo Park, California, November 18, 2024 — DCM Ventures, a global early-stage venture capital firm headquartered in Silicon Valley, today announced that it is adjusting its investment operations to better meet the expectations of its Limited Partners (LPs) and remain focused on its core principle of investing in and building startups that represent the future of technology. To this end, DCM Ventures is spinning off its angel and seed fund team into a new, independent investment firm led by Managing Partner Osuke Honda. The new firm (name to be announced in 2025) will focus on angel and seed-stage startups, with its debut fund expected to deploy the majority of its capital in Japan.

Hurst Lin, Managing Partner of DCM Ventures, said: "In the face of an ever-changing venture capital industry, the core principles we uphold will provide a solid foundation for building strong portfolios now and in the future."

DCM Ventures' early investment principles are driven by data research and due diligence, establishing independent judgment and strong conviction around technology innovation opportunities. Under these principles, the firm has invested in boldly innovative companies including Bill.com, Kuaishou, SoFi, and Vipshop. This approach has enabled DCM Ventures to consistently identify innovative entrepreneurs with global vision and actively partner with them to build great companies. These principles remain core to DCM and its future funds.

"I want to thank the entire DCM team for their tremendous support over the past 17 years," said Managing Partner Osuke Honda. "I am excited for the next chapter."

Hurst Lin added: "Over the years, we have worked together as a cross-border global team and learned a great deal from one another. We sincerely wish Osuke every success on his new journey."

Image source: IC Photo