A Top China VC Firm Struggles to Raise Funds After 10% Return, U.S. Investor Fears

Despite a difficult climate for raising money, at least four top-tier Chinese venture capital firms set ambitious goals to raise billions of dollars this year from Western institutional investors. Some have already succeeded—but not all of them.

Matrix Partners China, one of China’s most prolific early-stage VC firms and an early backer of household names including ride-hailing app Didi Global and food-delivery app Ele.me, is struggling to meet its target of at least $1.5 billion for a new fund from institutional investors in the U.S. and elsewhere, according to three people familiar with the situation. Its fundraising difficulties reflect growing concerns about geopolitical risks as well as China’s weakening economy amid Covid-19 lockdowns. Additionally, the performance of Matrix China’s recent funds didn’t meet some investors’ expectations, two of the people said.