Cathay Innovation Raises $ 550 Million For Second Global Venture Capital Fund – TechCrunch

As the global economy still resolves in the face of the pandemic, we hear of fewer new venture capital funds these days. However, today is an exception, because Cathay Innovation he raised a second fund of $ 550 million, about double his first fund and, according to his leader Denis barrier, is greater than the "initial objective" of the company.

Cathay Innovation & # 39; s The initial fund had a few winners. The company, which is part of the same organization but different from the private equity team Cathay Capital, invested in Pinduoduo. The Chinese e-commerce giant has raised funds from Cathay Innovation when it was a start-up startup. It is worth around $ 70 billion today. The first Cathay Innovation fund also directed the Chime Series B;

We contacted Barrier to find out more about what has changed for his business and his plans for the new capital.

With his new fund, Barrier spoke to Heaven32 about his business mod – target stage, target ownership percentage, etc. – do not change. So if the model does not change, why raise more money? What will you do with the excess cash?

According to Barrier, two things. First of all, more money will allow the fund to follow the winners a little more over time. According to the VC, a fund could have put more capital in Pinduoduo and Chime if it had had the capacity. Some venture capital firms use special purpose vehicles (SPV) for this type of work. The other option is to raise a larger fund. And second, Barrier wants to do more business in Southeast Asia.

This geographic expansion follows the Cathay Innovation model. The company has offices around the world and tries to share information from one geography to another. The goal is to learn for yourself and apply that knowledge elsewhere to spot impending trends in the United States, for example, after seeing, for example, China. The hope is that this type of information exchange will allow you to make better bets sooner.

In fact, this concept is something that Barrier has already pointed out in Heaven32. In our last discussion, you looked at two examples of the concept in action. The first is that his company has seen the emergence of neobanks (demanding banks) in Europe before their real takeoff in the United States. Hence the Chime deal. And the head of Cathay Innovation noted that, because his company had an office in China, it was 45 days ahead of the rest of the world regarding COVID-19, giving it the opportunity to tell its companies about wallet what will happen.

It & # 39; s an interesting model that worked in its first fund; The real test of the company's ability to see the corners will come with the results of its second fund. Since this new investment vehicle is about twice as large as the first, it has far more returns to generate. You will need more breakdown agreements and you will need to make sure that you invest capital in them.

At this point, there is an additional potential difference between the first and second stockings. Barrier told Heaven32 that his team can now conduct larger rounds if they wish. This could, again, help the company to achieve larger reductions from companies which it believes will generate huge returns.