Venture capital (VC) firm SparkEdge Capital announced on Monday that it has closed an oversubscribed Chinese yuan blind-pool fund at over 900 million yuan ($123.6 million) to focus on the new energy sector.
As its first blind-pool fund, the vehicle will also invest in the electronics and semiconductors industries, covering verticals including photovoltaics (PV), energy storage, hydrogen energy, automotive electronics, and new energy power electronics, said SparkEdge in a statement.
A blind-pool fund collects money from limited partners without any stated investment goal.
SparkEdge plans to prioritise “forward-looking opportunities” across all funding stages under “a DPI-driven investment strategy,” said the firm. DPI, or distributed to paid-in capital, measures the total capital that a private market fund has returned thus far to its investors.
The Shanghai-based VC closed its oversubscribed maiden RMB fund despite continued fundraising challenges in China’s venture market. The number of newly-launched private equity (PE) and VC funds in China decreased by 11% year-on-year to 2,148 in Q3 2023, according to a quarterly report by alternative assets research firm CVSource.
SparkEdge, founded in 2015, started as an investment firm specialising in mergers and acquisitions (M&A) in the new energy industry. It had invested in and managed multiple new energy and semiconductor enterprises, including Vietnam-based PV manufacturer Vina Solar Technology, which was sold to China’s LONGi Green Energy Technology for 1.78 billion yuan ($244.4 million) in 2020.
The firm shifted to multi-stage VC dealmaking in 2021 and has by far invested in over 30 companies since the strategy change.
It was the lead investor in the Series A round of China’s Hithium Energy Storage Technology and later doubled down on the firm’s Series A+ and B rounds. Hithium, which is expanding in the US, Europe, and South Asia, closed over 4.5 billion yuan ($617.7 million) in a Series C round in July.
SparkEdge also invested in Fox ESS, a Chinese developer of solar inverters and energy storage solutions, by leading the firm’s over-1-billion-yuan ($137.3 million) pre-initial public offering (IPO) round in May.
The fundraising process of its blind-pool fund took about seven months, said SparkEdge. Key limited partners (LPs) include the controlling shareholder of the publicly traded Chinese solar developer JA Solar Technology, alongside a few other China-listed companies such as high-end equipment manufacturer Maxwell Technologies and Lyric Robot, a provider of smart manufacturing solutions.
Several funds-of-funds (FOFs) and government investment platforms like Suzhou Fund, Xiamen C&D Emerging Industry Equity Investment, and Shanghai STVC Group also committed to the vehicle.
SparkEdge said that it plans to fully deploy the fund before the end of 2023. In the meantime, the firm kicked off fundraising for two new funds, including the second RMB fund under the same strategy and its first US dollar fund for investments in overseas new energy assets and equities.
To date, the debut RMB fund has built a portfolio including about two-thirds of early-to-middle-stage startups and one-third of growth-to-late-stage projects, said the firm.
Seven of its portfolio companies are raising follow-on financing, while about five of them are in the process of a public listing.