IFC to boost its VC investment in innovation startups

World Bank Group member wants to increase its exposure in the area on the mainland

International Finance Corporation, a member of the World Bank Group, will increase its venture capital investments in China's innovative startups sector next year, a senior company executive said.

Nikunj Jinsi, who heads IFC's venture capital global investment group, said at a time when the market is slowing down and people are getting a bit nervous about it, this is an opportunity for the company to come in and increase its exposure in the area.

"We will increase (investments) here, both to funds and to direct investments," he said.

Although his group did not have a fixed investment allocation for the future, Jinsi said he remains positive about the mainland.

"China has always been our largest market, for everything we do," he said.

Jinsi said he sees great opportunities in the healthcare, education and e-logistics sectors.

IFC's two main strategic goals in China were first of all to look for more advanced startups in need of series B funding or beyond, and to find good venture fund partners, according to Jinsi.

In these two categories IFC's average annual investments in China took 20 to 25 percent of its total venture capital fund－or $200 million a year globally of the total funding.

IFC is a major global development institution, focusing on the private sector in emerging markets.

In China, it has been shifting priorities from financing that supports traditional industrial sectors to being a financing catalyst for innovations emerging in the new economy.

"Both labor force expansion and capital investment are receding as China's two major sources of growth," Vivek Pathak, IFC director of East Asia and Pacific, said at the China Innovation Forum in mid December.

"Instead, innovation is emerging as a new driver of growth and has the potential to contribute two to three percentage points of GDP growth－worth an estimated $1 trillion to $2.2 trillion per year－by 2025," he said.

So far IFC's venture capital portfolios in China cover various sectors such as e-logistics, healthcare, financial technology, and resource efficiency.

For instance, IFC, together with other investors, led the latest funding in Guiyang Huochebang Technology Co Ltd, also known as Truck Alliance.

Established in 2008, Truck Alliance creates a mobile application to connect Chinese shippers with truckers.

This online long-haul logistics platform announced on Thursday it had raised $115 million in series B-1 funding exercise.

This investment, according to IFC, aims to improve the efficiency of the country's freight logistics, increase truck drivers' income and reduce shipping costs.

"Big data will play a significant role in increasing logistics efficiency in the future," said Richard Zhang, CFO of Huochebang.

Microvast Inc, another IFC portfolio investment, is also technology-oriented. The Huzhou-based company focuses on ultrafast charging and long-life electric vehicle battery systems.

"There are a large number of business-model innovations (in China) so far, but its technological innovation is thriving," Nikunj Jinsi said.

"Technology-driven innovation is a key driver for continued growth," he added.

Jinsi said his criteria for deal sourcing included an entrepreneur's ambitions, the potential size of market, what the team had executed so far, and a business leader's discipline on cash burn.