China’s Source Code Capital builds mentoring network for investee start-ups
Network provides better visibility of investee companies’ performance and guide for follow-on investments, says founding partner
Beijing-based emerging venture capital Source Code Capital says it has built a mentoring network resembling an accelerator for the 100 start-ups that it invested in, as following through an investment is as important as starting one.
Founding partner Charlie Cao said linking up the 40-plus investors who have invested in Source Code funds with founders of its portfolio investee companies would provide the start-up entrepreneurs with access to mentoring and guidance from experienced executives from Chinese private and state-owned firms.
As China grew into the world’s second largest market for venture capital deal flows, Chinese managers like Source Code are developing their own models to manage post-investment relationships with their portfolio companies.
Source Code’s model – Code Class – resembles an accelerator programme common in the US and Europe, which is focused on intensive mentorship and guidance. The difference is the start-ups in the Code Class network have already commercialised their ideas, and would have passed the stage of requiring seed funding that an accelerator programme usually provides.
“Through such a network, we can have better visibility on the business performance of our investee companies. This allows us to make better judgement on whether we should make follow-on investments, or support their next round of financing,” said Cao.
In January, Source Code, which manages several US dollar funds worth US$750 million and renminbi-denominated funds totalling 3 billion yuan, made several investments into start-ups in artificial intelligence technology and the internet sector. It provided series A financing to Ziroom, an internet flat leasing operator, in a four billion yuan deal led by Warburg Pincus, Tencent Holdings and venture capital firm Sequoia.
It has also provided follow-on series B financing to Zichan 360, a non-performing asset servicer which uses artificial intelligence to calculate bad loan asset valuation and recovery rate.