In China, the investment game for automotive startups is becoming increasingly competitive, with established venture capital companies as well as industry veterans joining the race. The country’s major electric car-making upstarts have backed two mobility-focused funds that just closed fresh rounds. Rockets Capital, a brand new venture and growth-stage investment vehicle, announced the closing of its $200 million first fund earlier this month, with EV manufacturer Xpeng as the lead investor. IDG Capital, Sequoia China, GGV Capital, 5Y Capital, and eGarden are among the other Chinese institutional investors. The fund is looking for investment possibilities in the automotive value chain, clean energy, and other “frontier technology” areas.
Nio Capital’s oversubscribed $400 million sophomore USD fund, the Eve ONE Fund II, was the second notable closing this week. Sovereign wealth funds, insurance companies, multilateral financial organizations, funds of funds, family offices, pension funds, and foundations from all over the world are among the many investors. Nio Capital was founded by William Li, the founder of Xpeng’s archrival Nio — hence the fund’s name — despite the fact that the investment firm is unrelated to the automobile. Along with its USD fund, the business operates an RMB fund that focuses on the auto, technology, and energy industries.
Rockets Capital makes its relationship with its electric vehicle investor more transparent. While it will function independently, it will take advantage of Xpeng’s “industry knowledge and resources” and “incubate technical innovation.” It’s hardly unexpected that some of Rockets’ prospective portfolio firms conduct business or associate with Xpeng, given the stated purpose. Nio Capital, which was founded in 2016, has a head start in the financial world.
Two prominent robotaxi firms, Bosch-backed Momenta and Toyota-backed Pony.ai, Temasek-backed lidar producer Innovusion — which is also one of Nio’s suppliers, BP-backed battery swapping Aulton, and auto chipmaker Black Sesame are among the company’s most significant deals in China. Nio Capital has constructed a fortress around itself with up-and-coming firms in China’s car sector during the last few years. Now it’s up to Rockets Capital and its patron Xpeng to play catch-up and establish an alliance to alter the market.