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GSR Venture closes $383m fund

By Wang Xu (chinadaily.com.cn)
Updated: 2009-01-06 17:06

GSR Ventures, a Beijing-based venture capital firm, closed a $383 million fund today, saying long-term investors are still upbeat about China's technology sector.

Established in 2004, GSR already manages $280 million in two funds. The third one, which was over-subscribed, will also be used to finance early-stage startups in hi-tech sectors, including the Internet, wireless, green technology and semiconductors.

"Investors are still optimistic about the long-term prospect of the nation's technology startups," said Alex Pan, managing director of the firm. "The credit crunch has actually brought down the valuation of the startups."

According to Pan, the current valuation for startup companies has dropped to around 4 times of their annual profit, compared with about 15 times in 2007, when the stock markets were at a record high.

Still, the current economic downturn also impacted its portfolio companies, said Pan. "But as most of its portfolio companies are in the high-margin technology sector, the impact could be less severe."

GSR invested in 9 companies in China in 2008, and had 26 portfolios by the end of 2008.

GSR also announced the first investment in the new fund today: it has bought into iLemon Group Inc, a Shanghai-based gaming company which develops world-class 3D virtual worlds using web browser-based technology.