In a positive sign for the venture capital business during exceedingly tough times, cross-border investment firm Qiming Venture Partners has raised a new $1.1 billion Fund VII focused on early bets in healthcare and tech businesses.
The Qiming team of partners in China and the U.S. closed the fund at the target amount and on the initial timetable despite challenges caused by the Covid-19 pandemic as well as geopolitical uncertainties. The backdrop to the fund raising is unfavorable US-China relations as the two tech superpowers battle over leadership and an overall drop in venture capital investment globally.
"It was quite a process. We reorganized the firm last year, and we knew that the US – China relationship dynamics presented some of a challenge," said Gary Rieschel, founding managing partner of Qiming Venture Partners. "We also knew that many limited partners are over-allocated against their models to VC. Add in the Covid pandemic and we had interesting circumstances."
The firm was restructured in 2019 to reinforce the focus of technology teams on earlier stage investments. Qiming has several portfolio companies in the healthcare market, working to combat the coronavirus pandemic such as CanSino Bio, which has recently started vaccine tests in China.
In announcing the fund raising news, Qiming noted the firm distributed more than $1 billion in cash returns to LPs in 2019 and that anchor investor PRINCO or the Princeton University Investment Company, with the firm since its inception, was in tow.
Downturns are typically regarded as opportune times for venture investors to make new deals with startups. Valuations are often lower, and entrepreneurs hungrier. Yet startup financing so far this year is taking a hit. Private market funding in the first quarter of 2020 is on pace to reach $77 billion, a 16% decline compared to the previous quarter and down nearly 12% versus Q1 2019, according to CBI Insights. Seed stage funding is predicted to fall by 22% in the first quarter of 2020, versus the previous quarter.
Qiming got an early start in China tech investing in 2006, spearheaded by Rieschel and Duane Kuang.
The venture firm's investments include several Chinese tech titans such as smart phone maker Xiaomi, superapp Meituan Dianping and robot maker UBTech.
More recently, Qiming has opened US offices and invested state-side while continuing its China approach. Qiming manages nine US dollar funds and five RMB funds with $5.3 billion under management.