Ignition's Chinese VC affiliate raises $320 million

Qiming Venture Partners, a Shanghai-based affiliate of Bellevue's Ignition Partners, said Tuesday it had raised $320 million from global investors aiming for a stake in China's epic boom.

The fund also announced that Ignition partner and Starbucks veteran Robert Headley will join the firm's investment team in Shanghai.

The funding round, Qiming's second, will finance startups in health care, technology, media and consumer-oriented ventures, seen as fertile ground due to the unprecedented affluence of the Chinese middle class.

Among Qiming's ventures there are a dating site, a network of schools and an online jewelry retailer.

When Qiming closed its first $200 million fund in early 2006, it planned to invest mostly in telecommunications, Internet services and computer technology.

Qiming said the new fund reunites top institutional investors from around the world, including Princo, the investment arm of Princeton University, but it declined to name other investors.

Qiming's infusion underscores how Western investors view China as a land of opportunity.

Venture capitalists invested $585 million in 73 deals there during the first quarter of 2008, up 12.9 percent from a year earlier, according to Chinese state news agency Xinhua, citing figures from consulting firm ChinaVenture.

"China is going through a very interesting time in its development," said Duane Kuang, Qiming founder and managing director, in a news release. "Things have matured to a degree that the fundamentals of true commitment, long-term outlook and real hard work with entrepreneurs are becoming essential."

China, which holds more than $1.5 trillion in foreign exchange reserves, doesn't need outsiders' money. But to breed successful early-stage companies, it could use some of the savoir-faire perfected by U.S. venture capitalists, said University of Washington international-studies professor David Bachman.

The conditions seem ripe. U.S.-trained Chinese executives and entrepreneurs are flocking home, setting the foundations for a bridge between Silicon Valley and Shanghai.

China's government, eyeing an opportunity to inject world-class managerial and financial skills into its economy, encourages such efforts.

"They recognize they can't keep producing more and more basic products. They have to move up the technology ladder if China is going to continue to thrive," Bachman said.

Whether the U.S. venture-capital model will take root remains to be seen. There's a shortage of capital for small companies, and intellectual-property laws — on which many startups depend — are not as tough as in the U.S.

"There remains a question of institutional fit," Bachman said.

Qiming also said Hans Tung, former China representative of Bessemer Venture Partners, joined the firm as a new partner, along with Richard Chen, a veteran investor in Chinese media and consumer startups.

Qiming (pronounced chee-ming) is a Chinese name that signifies starting, enlightenment and the dawn of a new day, Ignition said at the time the firm was launched.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com

The story includes information from Seattle Times archives