IDG throws an extra $1b into China’s overheated startups

Shanghai’s fast-changing skyline. Photo credit: Pixabay.

Everyone in the tech industry is talking about how overheated and overvalued China’s startup scene is getting. Uber arch-rival Didi raised US$7.3 billion in its latest round, for Chrissakes. But that’s not stopping early Facebook invester Jim Breyer.

The Wall Street Journal reports:

Veteran Silicon Valley investor Jim Breyer and Chinese firm IDG Capital Partners have raised one of the largest venture-capital funds in China despite concerns that the market for later-stage startups is overheated.

Mr. Breyer, best known for his early investment in Facebook Inc., and IDG Capital, one of China’s top investors, jointly announced Tuesday they raised $1 billion to invest in growth-stage companies both in China and those looking to enter the country. The new fund will make investments in a wide range of industries including technology, media, health care and energy.

The fund is the seventh and largest China investment fund that IDG and Mr. Breyer have sponsored dating back to 2005, according to Dow Jones LP Source. The first five were a collaboration between IDG and Mr. Breyer’s old US firm, Accel Partners, and the last two between IDG and Mr. Breyer’s new firm, Breyer Capital.

Breyer insists he’s still being cautious. “When late-stage company valuations are as high as they are today in China and the US, prospective returns are much lower than they have been,” he said. “I try to remind myself and my Chinese partners: ‘Do not pursue high returns in a low-return environment.'”

This latest boatload of cash is IDG Capital Fund III, nearly double the size of the VC’s previous fund.