Prominent ByteDance investor preps new $300m AI-centered fund: report

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Source Code Capital, an early investor of TikTok parent firm ByteDance, is preparing a US$300 million AI-focused venture fund, marking the firm’s first major investment effort since 2021, Bloomberg reported, citing sources.

The amount is not yet finalized and could change down the line, the sources added.

VC activity in China has fallen 40% year on year in the first quarter of 2024. This makes Source Code Capital’s fundraising significant, as it could signal renewed investor interest in the country, especially in the AI industry, the report noted.

The firm, founded by former Sequoia China investor Cao Yi, holds roughly US$5 billion across its yuan and dollar funds. Aside from ByteDance, it has also invested in the likes of food delivery platform Meituan and electric scooter manufacturer Niu.

Source Code Capital has consistently backed ByteDance, starting with a US$5 million investment after Cao met founder Zhang Yiming in 2012. However, despite these investments, returns have been negligible due to the lack of a forthcoming IPO from the tech giant.

Additionally, TikTok is currently facing regulatory troubles in the US, with the app possibly facing a ban in the country. In response, TikTok and ByteDance took legal action, saying that the move would violate First Amendment free speech rights in the US Constitution.

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