(Bloomberg) — Source Code Capital, among the earliest backers of TikTok owner ByteDance Ltd., is halving its fundraising target to about $150 million due to less-than-expected investor interest, people familiar with the matter said.
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The Beijing-based firm plans to scale back an original target of raising $300 million for a new US-dollar fund led by partner Samuel Huang, the people said, requesting not to be named discussing a private deal.
That marks a setback for the fund, which hasn’t created a major investment vehicle since early 2021. Its target remains preliminary however and could change, the people said.
Source Code’s fundraising will be closely watched as a gauge of appetite for bets on the country’s tech sector. Beijing’s crackdown on the broader internet sector and a persistent downturn has cooled Chinese startup investing since the pre-Covid era, when US and domestic capital flowed into everything from dating apps to grocery platforms.
In 2024, 11 China-based US-dollar VC funds raised $1.3 billion, accounting for 28% of the total out of the Asia Pacific region, according to Preqin. That compares with 62 funds raising $17.2 billion, which accounted for 60% out of the same region, in 2021.
The rise of a coterie of bleeding-edge startups such as DeepSeek is reviving interest in early-stage bets, though it’s unclear by how much. Local money in recent years pivoted to AI and harder-edged segments like chips — spheres that Beijing openly endorses in a tech race with the US.
But Washington has imposed restrictions on American investment in sensitive Chinese sectors, curtailing a big source of money.
US investors, from endowments to pension funds, who bankrolled China’s internet miracle over the past decade have grown more cautious about funneling money into the country, with some withdrawing entirely. The former Sequoia China, which raised $9 billion across four funds in 2022, split off from its US operations under intense pressure from Washington lawmakers.
A Source Code spokesperson declined to comment on the fundraising.
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