Chinese venture capital firm CM Venture Capital’s corporate-backed third fund has added a new limited partner, Tong An Holdings, an asset manager.
Tong An joined another LP, industrial base Anqing High-Tech Zone, and they have committed RMB150m ($21.7m) to this latest close.
The Delaware-registered, USD-denominated fund is targeting $100m, having reached a $30m first close in January 2021 with capital from chemical manufacturer Sabic, tobacco producer BAT, speciality metal supplier Heraeus and oil and gas provider Petronas.
“The fundraising was hampered by the pandemic but is now back on track,” a spokesperson from CM Venture Capital told Global Corporate Venturing.
“This RMB150m is part of our second closing, which totals RMB300m ($43.3m) – we have two other RMB investors who will join in the second closing. We will be conducting a third closing towards the end of the year, to bring the fund to target size.”
Founded in 2010 as China Materialia, the firm targets companies developing hardtech, synthetic biology, carbon capture and utilisation, as well as environment and sustainability.
Tong An’s interest in these areas aligns well with CM Venture’s expertise, and the referral came from petroleum refinery Sinopec China, the source said.
CM Fund 1 was sized at roughly $22m while Fund 2 was about $65m, and Fund 3’s $100m target is “a nice evolution of the fund”, the person added.
CM Venture is an early-stage investor and has backed companies from seed to A round including hydrogen equipment producer Guofu Hydrogen, third-generation semiconductor manufacturer Global Power Technologies and bioenergy company Enwise.
Diamond compound semiconductor provider Compound Semiconductor, bio-friendly PVA material developer Sengong and CO2-to-material company Econic are also among the earlier portfolio companies.
The first fund had no multinational corporations (MNCs) among its LPs but its second iteration had six corporates – GE, Samsung, Sabic, BASF, Henkel and BAT. Its third fund will also have six to seven corporate investors, having already secured four in the first close.
“We typically have 60% CVCs and 40% from other strategic investors,” the source said. “MNCs contribute their industrial network and industry know-how, a regional investor like Tong An contributes policy and local development support, and so on. We carefully choose our LPs as each LP brings unique and strategic value.
“Fund III continues CM Fund 2’s industry focus on materials, new energy, advanced manufacturing and environment – ESG (environmental, social and corporate governance) is a big part of our investment theme.”