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Primavera Venture Partners on track to raise USD 500m to invest in healthcare, climate tech – Co-Head

Primavera Venture Partners (PVP), the venture capital arm of Primavera Capital Group (PCG), is “on track” to raise a total of around USD 500m for its USD and CNY funds, said Johnny Zou, Co-head of PVP.

PVP completed the final close of its USD fund earlier this year. Fundraising for the CNY fund is still ongoing, but a date for the final close is yet to be determined, said Zou.

The sponsor, backed by institutional and individual LPs “across all geographies,” will deploy the USD 500m across 40-50 early-stage startups in AI, med tech, climate tech, new generation information technology, and intelligent manufacturing sectors, Zou said.

Region-wise, PVP will primarily focus on Greater China, Southeast Asia, Europe and the US, Zou said, adding that PVP has already written cheques to around 20 companies.

Average ticket size sits between USD 5m and USD 10m. Stage-wise, the sponsor will consider targets in seed through Series B rounds, although Series B investments are less likely these days due to high valuations in the primary market, Zou revealed.

The co-head did not specify an equity range, but said they want to play an active role in supporting their investees regardless of stake ownership.

“Obviously, from a strategy perspective, we would like to have more ownership in the company from early on to help them even more, but that also is dependent on the stage of the company,” he said.

Founded in 2020, PVP is co-headed by Johnny Zou and Dapeng Zhu, with the latter primarily focused on investments in the deep tech sector. 

Notable portfolio companies include Boston-based Adden Energy, a developer of solid-state battery systems for EVs; Aurora, a Shanghai-based SaaS platform focused on digitizing clinical research processes in life sciences; Accutar Biotech, a New York-headquartered, AI-based drug discovery company; and Xbiome, a Shenzhen-based AI-driven microbiome drug development company, according to Zou.

Opportunities in healthcare, climate tech

At the core of PVP’s investment philosophy is the need “to be on the right side of sector focus,” both from a regulatory and from a technological development standpoint, Zou said.

From a technological development standpoint, China is “witnessing a huge wave of innovation, [especially] within the healthcare space.” This boom is reflected in the increasing number of out-licensing activities among Chinese pharmaceutical companies, which was “unthink[able] of five, ten years ago,” he said.

Within healthcare, PVP is actively scanning for startups that lie at the intersection of artificial intelligence and healthcare, including those involved in drug discovery, imaging, and diagnosis. For med tech specifically, the sponsor is interested in medical robots and technologies relating to early cancer diagnosis, according to Zou.

For climate tech, the sponsor will primarily focus on companies that “help with waste removal” and “reduce carbon emissions.” It will also look into companies that play a key role in the EV supply chain or energy storage space, he added.

External and internal synergies

Many of PVP’s current portfolio companies are dual headquartered in China and overseas. This, according to Zou, is beneficial from a technological standpoint, as many overseas tech startups “have a strong interest” in expanding into Greater China and bringing advanced technologies into the region.

More importantly, a balanced portfolio will allow the sponsor to better navigate the different regulatory regimes among countries, especially as these rules relate to the pharmaceuticals industry, he said.

The co-head also sees potential synergies between Primavera’s venture and PE portfolios, explaining that the venture-stage companies could easily tap the resources and supply chain capabilities of their larger counterparts in the main fund. 

Moreover, Zou and his team are open to exploring M&A and JV opportunities across VC and PE portfolios, although there are certain concerns around ownership that they need to be mindful of.

“We’re definitely open to different ideas, and especially in today’s world, I would say being innovative from [a] corporate governance or corporate structure perspective is always a good thing,” Zou said.

Zou declined to provide further details on an exit timeframe.

Johnny Zou is the Co-Head of Primavera Venture Partners and Executive Director at Primavera Capital Group. He joined the company in 2013, and sits on the board of Zap Surgical, Accutar Biotech, and Accession Therapeutics, among other portfolio companies. Prior to joining Primavera, Zou worked as a research analyst at JPMorgan. He received a B.A. in History from Yale University, and an MSc. in Economic History from the London School of Economics, according to his LinkedIn page.