Bertelsmann’s Chinese venture capital arm, BAI Capital, has received external investment for the first time to close a $700m fund today that will help portfolio companies expand overseas.
“We would like to express our sincere gratitude to our investors for their strong support of our inaugural USD-denominated fund, which is a testament to the BAI team’s investment strategy and achievements over the past 15 years,” says founding partner Annabelle Long (pictured, translation by Global Venturing), in a release.
“We will continue to focus on early and mid-stage startups, build a diversified and risk-balanced investment management portfolio, accompany outstanding entrepreneurs and contribute solid and superior returns to our investors across the cycle.”
The backing of external LPs can also be seen as a vote of confidence in China’s venture capital sector, where investments by all of the largest tech companies in the country have slowed over the past 18 months amid government pressure.
Initial public offerings in China, however, pulled in twice as much as those in the US in the first half of 2022, and Vice-Premier Liu He publicly pledged support for the sector in May.
VC firms Sequoia China and Qiming Venture Partners have already closed more than $12bn between them for their latest funds this month, indicating confidence is coming back to the country’s startup scene.
Also known as Bertelsmann Asia Investments, BAI Capital was set up by German media conglomerate Bertelsmann in 2008 to target the Chinese consumer market, and it subsequently racked up a string of more than 40 unicorns including online car trading portal Uxin and cloud storage provider UCloud.
Bertelsmann continues to supply finance for BAI, but its latest fund has received support from undisclosed internet groups, insurance firms, sovereign wealth funds and funds of fund. BAI said it is seeking to use their resources to help local portfolio companies expand internationally.
“In the future, BAI Capital will continue to build on the vast industrial resources and global network of the international media, education and services giant Bertelsmann Group, especially its deep European presence, and unite the strategic resources of more LPs to leverage BAI’s unique positioning to further open up paths for Chinese companies to succeed globally and cooperate with others in the increasingly complex cross-border political and economic environment,” Long says.
The firm will target retail and financial technology developers as well as businesses focusing on online media content, the metaverse and the wider Web3 sector, which could encompass cryptocurrency, decentralised finance and non-fungible tokens (NFTs).
Models related to newer technologies such as industrial digitalisation and autonomous or new energy vehicles are also being explored. Long also sits on the board of Nio, the autonomous electric car developer whose own VC vehicle, Nio Capital, closed a $400m fund with external backing in March.
BAI plans to open offices in Singapore and the German city of Berlin, which would make it the only Bertelsmann VC vehicle to maintain a physical presence in Europe, giving it the means to use the corporate’s media assets, which cover books, magazines, television and radio, to help startups grow.
News of the vehicle comes less than a month after Bertelsmann India Investments (BII), the media group’s Indian corporate venturing affiliate, closed a $500m fund, though no external LPs were named.
Both units are part of a wider Bertelsmann Investments group that includes the New York-based BDMI and Bertelsmann Brazil Investments.
Photo of Anabelle Long courtesy of Nio. Feature photo courtesy of Henry Chen via Unsplash.
