SAN FRANCISCO (Reuters) - Venture capital firm DCM Ventures, which invests primarily in China and the United States, has raised a new $500 million fund to back early-stage technology startups.
DCM Ventures, one of the few firms that has straddled China and Silicon Valley since its founding 20 years ago, has joined a rush of venture capital fundraising that put this year on pace to be the most lucrative since 2000, according to Thomson Reuters data.
Venture capital firms have raised more than $22.8 billion so far this year, with the lion’s share of that in the first quarter.
The $500 million pot is DCM’s eighth fund dedicated to early-stage technology companies and is accompanied by a $170 million fund for growth-stage deals, which allows the firm to double down on existing portfolio companies, and a $100 million fund for seed-stage deals.
With its flagship fund, DCM Ventures looks to invest roughly $5 million to $10 million per company. The firm is particularly interested in bets on artificial intelligence startups, messaging platforms, software-as-a-service, drones, virtual reality and cross-border technology, such as apps to teach a foreign language, said co-founder and general partner David Chao.
He added that corrections in the public and private markets have helped drive down prices and slowed the pace of investment, making some deals more feasible than they would have been just a year ago.
“Now people are more price sensitive,” Chao said in an interview with Reuters. “Now entrepreneurs don’t expect us to put a term sheet down in two weeks.”
Some of DCM’s previous investments include medical marijuana delivery startup Eaze, fitness tracking device maker Jawbone and anonymous messaging app YikYak.
The firm says it now has more than $3 billion under management. It raises money from traditional limited partners such as pension funds, but also some of Asia’s top internet companies, including Tencent, Baidu, SoftBank and Yahoo Japan, Chao said.
The Menlo Park, California-based firm invests not only in China but also Japan and South Korea. Twelve exits - initial public offerings and acquisitions - from its portfolio have returned $1.5 billion to the firm’s limited partners over the last three years, DCM Ventures said. Those deals include 1 Mainstream, a cloud video platform acquired last year by Cisco, and 58.com, a Chinese online classifieds company that raised $187 million in its 2013 public offering on the New York Stock Exchange.
Reporting by Heather Somerville; Editing by Andrew Hay