Gaorong Ventures Closes $500 Million New Fund, Positioning Itself as a Long-Term Partner in Building Startup Value

Gaorong Ventures founding partners Chang Chen, Gao Xiang, and Yue Bin (from left to right)

On December 6, Gaorong Ventures announced the completion of a $500 million raise for its fourth USD fund. In early May this year, Gaorong had already completed a 560 million yuan raise for its third RMB early-stage fund. Currently, the nine funds under Gaorong Ventures' management have a combined AUM of approximately 15 billion yuan (or roughly $2.2 billion).

After completing its $400 million third USD fund and 2.5 billion yuan RMB growth fund in Q1 2017, Gaorong became the first institution in Chinese venture capital history to surpass 10 billion yuan in fundraising AUM within just three years of its founding.

Following this fundraise, Gaorong Ventures will continue to focus on early and growth-stage investments in TMT sectors including new consumer, new technology, industrial internet, and enterprise services.

Institutional LPs as the Capital Foundation, Entrepreneur LPs as Ecosystem Value-Add

Gaorong's fourth USD fund significantly oversubscribed among its existing LPs, reflecting global top-tier institutional investors' recognition of Gaorong's actual performance and team strength. Gaorong also welcomed two prestigious university endowments as new LPs.

Gaorong Ventures founding partner Chang Chen stated, "The $450 million Main Fund of Gaorong's fourth USD fund, open to institutional LPs, received enthusiastic commitments from both existing and new institutional investors. However, we chose to maintain our investment principles and discipline, keeping the Main Fund size unchanged at $450 million." The $50 million Side Fund, open to Gaorong's management team and entrepreneur LPs, was also successfully raised.

Gaorong Ventures positions itself as "China's Founders Fund," with institutional LPs as its capital foundation and entrepreneur LPs as ecosystem value-add, building a sustainable ecosystem around investment and financing.

Gaorong's LP base includes both global top-tier institutional investors and corporate giants from China's internet, finance, agriculture, retail, advertising, and industrial manufacturing sectors. Additionally, dozens of successful entrepreneurs — founders of companies such as Tencent, Baidu, Taobao, Xiaomi, Meituan, Dianping, 360, Focus Media, Weibo, Sohu, JD.com, Vipshop, Tudou, Autohome, and Ganji.com — are also LPs in Gaorong Ventures. These top-tier LPs can provide Gaorong's portfolio companies with strategic support and assistance in terms of industry resources and capital.

Multiple IPOs Within a Year, Numerous Portfolio Companies Rapidly Becoming Industry Leaders

To date this year, Gaorong Ventures has seen multiple invested or partially-owned companies complete IPOs, including Pinduoduo (NASDAQ: PDD), HUYA Inc. (NYSE: HUYA), HMI (NYSE: HMI), Meituan (HKEX: 03690), and Ping An Good Doctor (HKEX: 01833), with several additional companies having filed listing applications. Deep learning solutions company DeePhi Tech was also acquired by Xilinx in Q3.

Numerous startups invested in or partially owned by Gaorong have grown into leaders in their respective industries, including: Pinduoduo, Huya Live, HMI, MOGU, Lifesense, Meituan, Ping An Good Doctor, Zhongrongjin, DeePhi Tech, Qian Daibao, Fanpu Jinke, Beibei, Leqi E-commerce, DotC, Nuro, YITU, Roborock, Tianrang Intelligence, Zhuiyi Technology, Hubo Technology, Oasis Labs, Beitai Haoche, Lianghuapai, Shuidi Mutual Aid, Testin, Doumi, BIGO LIVE, Danke Apartment, Qian Dama, Perfect Diary, Rela Life, and Ucommune.

New e-commerce platform Pinduoduo, which Gaorong Ventures led in Series A and B and continued to invest in through Series C and D, successfully listed on Nasdaq in July this year. Gaorong Ventures was consequently awarded the "Exit of the Year - IPO" award by AVCJ (Asian Venture Capital Journal) in November. This award is voted on by global top-tier institutional investors and is granted to only one candidate across all of Asia each year.

So far this year, Gaorong Ventures has also received honors including: China Venture Capital Committee 2018 Top Ten VC Institutions, Golden Bridge Awards 2018 China Best Return VC TOP5, Golden Bridge Awards 2018 China-US Impact Fund TOP15, 36Kr 2018 Most Founder-Friendly Investment Institution TOP10, 36Kr 2018 China's Most Influential VC Institution TOP10, and Yicai Weekly 2018 China VC Institution Ranking TOP10. Multiple investors have also received recognition from Fortune, Forbes China, 36Kr, Cyzone, Entrepreneur, and Yicai Weekly.

Systematic Investment Approach, Building Long-Term Value Alongside Founders

In terms of investment approach, Gaorong Ventures systematically combines top-down industry research with timely bottom-up coverage of key inflection points to better understand industry realities and underlying drivers, using its understanding of a project's sector to impress outstanding founders.

This approach encompasses service-oriented investment practices aimed at long-term value creation. Nearly five years since its founding, Gaorong Ventures has built a strong team of investors, post-investment support staff, and research center personnel who reinforce one another. By providing portfolio companies with high-quality human resources, operational resources, operation advice based on industry understanding, and financial and industrial capital operations, Gaorong brings value to the healthy growth of its portfolio companies.

Chang Chen stated: "As financial investors, we have a very clear understanding of the boundaries of our role. Through a series of post-investment services, Gaorong hopes to do its utmost to become one of the builders of long-term value for outstanding startups in their high-growth phase and future great enterprises."

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Gaorong Ventures Raises Over 10 Billion Yuan in Three Years, Setting Chinese VC Record

• Gaorong Ventures' combined USD and RMB fund AUM totals approximately 15 billion yuan, focused on early and growth-stage investments in the TMT sector.

• LPs include both global top-tier institutional investors and corporate giants from China's finance, retail, advertising, and other industries.

• Additionally, dozens of successful entrepreneurs — founders of companies such as Tencent, Baidu, Taobao, Xiaomi, Meituan, Dianping, 360, Focus Media, Weibo, Sohu, JD.com, Vipshop, Tudou, Autohome, and Ganji.com — are also LPs in Gaorong Ventures.

• The founding partners previously led investments in numerous outstanding companies, including Xiaomi, Razer, Baofeng Technology, G-bits, Tudou, Wondershare, Archermind, 91 Assistant, 3G.cn, MOGU, DotA Legend, and Yuanfudao.

• Numerous companies invested in or partially owned by Gaorong since its founding have grown into national and even global leaders in their industries, including: Pinduoduo (NASDAQ: PDD), Huya Live (NYSE: HUYA), HMI (NYSE: HMI), Lifesense (SZSE: 300562), Meituan (HKEX: 03690), Ping An Good Doctor (HKEX: 01833), Zhongrongjin (acquired by Homa Appliances), DeePhi Tech (acquired by Xilinx), Qian Daibao (acquired by Meituan), MOGU, Fanpu Jinke, Beibei, Leqi E-commerce, DotC, Nuro, YITU, Roborock, Tianrang Intelligence, Zhuiyi Technology, Hubo Technology, Oasis Labs, Beitai Haoche, Lianghuapai, Shuidi Mutual Aid, Testin, Doumi, BIGO LIVE, Danke Apartment, Qian Dama, Perfect Diary, and Ucommune.

• Gaorong Ventures maintains investment teams in Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou.

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