In the fourth year of Monolith, CAO Xi raised another 3.5 billion yuan.

Less than three years later, Cao Xi and his Monolith Capital have raised a new fund.

Just today, Monolith officially announced the final closing of two new funds: the second - phase US dollar VC fund and the first - phase RMB VC fund. The total size of the dual - currency funds is $488 million (nearly RMB 3.5 billion).

Monolith did not disclose the specific sizes of the two funds. According to China Venture Capital News, the final size of the RMB fund is about RMB 1.4 billion. By inference, the US dollar fund is close to $300 million. Moreover, both new funds were straightforward, skipping the "first closing" step and directly achieving a one - time close.

In total, including the first - phase US dollar VC fund and the successful secondary fund, Monolith, which has been established for four years, now has an asset management scale of over RMB 10 billion.

The new funds have several highlights. First, the final size is not small. Both the RMB and US dollar funds achieved over - subscription, but Monolith exercised restraint. Second, the fundraising speed was extremely fast, and we'll elaborate on this later. Third, it targeted a more market - oriented direction and made trade - offs regarding the investment return requirements. Fourth, it further focused on artificial intelligence.

Let's share a few observations first:

1. The investment approach is a matter of strategy, and large - scale fundraising is a privilege of top - tier institutions. With a new fund of RMB 3.5 billion and a management scale of RMB 10 billion in four years, Monolith has firmly secured the top position among emerging dark - horse VC firms, enhancing its brand image and momentum.

2. The narrative of the revaluation of technology assets continues. The attractiveness of Chinese AI and technology assets to global investors is still on the rise, which to some extent is driving the recovery of US dollar funds.

3. In the primary market dominated by state - owned capital, there is an opportunity for market - oriented VC funds with a scale of over RMB 1 billion to succeed. Fundraising ability is a prerequisite, and trade - offs are necessary. As for whether the toughest times for US dollar funds are over, we can't be certain. However, through Monolith's new funds, we can detect signs of the industry's recovery.

In the second half of this year, a number of US dollar funds, including Monolith, Lightspeed China Partners, Qiming Venture Partners, Black Ant Capital, and Yingce Capital, have reported plans to raise new US dollar funds. With the successful closing of Monolith's new funds, we believe that a series of good news from Chinese US dollar funds will follow.

Nearly $300 million in one month

I've always held the view that being a boutique firm is a strategic choice, while large - scale fundraising is a privilege of leading institutions. For example, 2021 was a booming year for US dollar fundraising. A quick review shows that a few top - tier VC firms received most of the funds. Now, with the changing market environment, successfully raising a moderately sized market - oriented fund might already qualify an institution as a leader.

Three years later, Monolith's second - phase US dollar fund maintained a slightly larger scale than the first phase, with a stable pace and size. When discussing scale, we can't ignore the time factor. In recent years, US dollar fundraising has been on the decline. To maintain a stable fundraising performance requires both expertise and perseverance.

Surprisingly, the fundraising speed was extremely fast. Similar to the first - phase US dollar fund, it took three months from the start of fundraising to the final closing for the second - phase US dollar fund. As we understand it, it actually only took one month from the start of fundraising to the confirmation of fund shares for this US dollar VC fund, and the following two months were just for administrative procedures.

Additionally, this fund achieved significant over - subscription. It is reported that the old US dollar LPs generously reinvested more than 100% of their previous investment amounts, and the investment intentions of all LPs reached 160% of the target scale. However, Monolith ultimately exercised restraint and reduced the overall fundraising amount, probably considering the institution's capacity limits and maximizing returns.

This situation really takes us back to 2021.

The reason might be the fund's good performance in the previous stage. Looking at the portfolio of the first - phase US dollar fund, including Moonshot AI, AiEdu, Beatbot, Joyln Technology, Even Realities, Hypershell... Most of these companies have achieved multiple rounds of financing after investment, and the book returns should be quite high. Take Moonshot AI as a typical example. Monolith participated in the first round of investment. If it successfully goes public in the future, it will likely be a highly profitable project.

The rapid fundraising also indicates signs of the industry's recovery. It is reported that the new LPs come from regions such as Europe, the Middle East, and Southeast Asia, which have been the emerging sources of LP capital in recent years. These LPs are becoming more and more eager to invest in Chinese assets, especially in the technology sector, which is well - known in the industry.

For these LPs, a common investment strategy is to include "new forces" in their portfolios as long as they continue to invest in China. Therefore, a "dark - horse GP" like Monolith is almost a must - have option. The niche advantage enabled Monolith to raise funds smoothly for its first - phase fund, and even after four years of establishment, the niche dividend of the "new fund" still exists. According to the industry's "third - fund rule", Monolith still has about one more fund's worth of "novice period".

It's undeniable that Monolith has caught a wave of good luck, which is a kind of opportunity of the era, a precise positioning in the so - called vintage year. But who can say that luck isn't part of strength?

Trade - offs for the RMB fund

The US dollar fund is Monolith's core business, while the RMB fund had to start from scratch. It was launched early in 2024, the year after the first - phase US dollar VC fund, and it took more than a year of solid work.

According to China Venture Capital News, Monolith aimed to raise RMB 800 million for its first - phase RMB fund and ultimately raised about RMB 1.4 billion. In a fundraising environment where celebrating a first - closing of a few hundred million is common, raising over RMB 1 billion for the first - phase RMB fund is a sign of success, comparable to the standards of top - tier GPs. The specific list of LPs has not been disclosed, but it is known that the cornerstone LPs are a leading domestic fund - of - funds and a leading listed industrial company.

The biggest highlight is the quality - the proportion of market - oriented LPs is very high, and there are almost no investment return requirements. Considering the scale of RMB 1.4 billion, this is not easy in the current market. There are still differences between the demands of state - owned capital and market - oriented capital. The structural characteristics among GPs and different funds are quite obvious. Both LPs and GPs have to make trade - offs, and it's getting harder to have the best of both worlds.

Monolith's RMB fund mainly invests in AI software and intelligent hardware, focusing on AI infrastructure, robotics, and intelligent hardware fields. In terms of investment attraction, these are sub - sectors where it is relatively easy to meet investment return requirements. However, Monolith still chose more market - oriented capital, presumably after careful consideration.

Therefore, Monolith's RMB fund may have more freedom in making investments compared to other funds. Its investment strategy is basically the same as that of the US dollar fund, and it serves more as a currency - specific investment vehicle.

For example, Moxing, a highly anticipated company about to go public, is likely to be the first listed project in Monolith's RMB fund. Since the RMB fund was not fully in place at that time, Monolith only participated in the last round of financing before Moxing's IPO. Even so, it still has a good chance of obtaining very substantial returns. In fact, this is also a project that Cao Xi invested in as early as his time at Sequoia China Seed Fund, in the pre - A round in 2021.

Another similar project is Unitree.

Obviously, in the Chinese investment market, if you want to have more initiative, the RMB fund is an indispensable tool.

The appeal of undervalued assets

In terms of strategy, Monolith remains a classic VC firm, looking for major opportunities in the era and selecting high - potential projects at an early stage.

Four years ago, the first - phase fund's investment scope was relatively broad, covering "next - generation consumer Internet, cutting - edge technologies, global B2B and B2C services". In the second phase, it gradually focused on AI - related applications and hardware, which is undoubtedly the absolute investment theme, and it will invest even earlier.

Looking at a larger scale, the relative undervaluation of Chinese AI projects compared to the US market might be one of the reasons for the smooth fundraising of Monolith's new funds.

Since 2022, due to factors such as the decline of US dollar funds, the valuations of top - tier Chinese companies in popular sectors such as AI large - scale models, software applications, embodied intelligence, and AI toys are much lower than those of foreign companies. Since 2025, the Hong Kong IPO market has ranked first globally, driving the overall recovery of the primary market. The rapid technological progress of Chinese companies such as DeepSeek, Unitree, and Zhipu is obvious to all. It's hard to say that foreign LPs don't have the fear of missing out (FOMO) factor.

For example, except for DeepSeek, the valuation of the top - tier Chinese large - scale model companies is only over RMB 20 billion, about $4 billion. At the beginning of the year, the seed - round valuation of Thinking Machines Lab, founded by the former CTO of OpenAI, reached $10 billion, not to mention star companies like Grok.

The valuation differences in embodied intelligence are also huge. The valuations of Zhipu, Unitree, and Galaxy Universal, the highest - valued domestic companies in this field, are all around RMB 10 billion. In contrast, Figure AI, an embodied intelligence company established around the same time as Zhipu, currently has a valuation of $39 billion, nearly RMB 280 billion.

Of course, there are differences in business scale, but the investment and allocation opportunities brought by the dozens - fold valuation differences will not be ignored by all LPs, especially those aiming to invest in global AI assets.

The compound interest of reputation

Another interesting detail is that Monolith, which has only been established for four years, is already reaping the compound interest of its good reputation.

In the VC circle, Cao Xi is well - known for being smart and good at interpersonal relationships, and he has a good reputation. A few years ago, a European LP showed its favor towards him, describing Cao Xi as "clear - minded and steady in action".

During this US dollar fundraising, we learned that a European LP decided to invest in Monolith even before meeting Cao Xi. The reason is that this institution conducted due diligence among some trusted LPs, entrepreneurs, and in the VC circle in advance and found almost no negative comments about Monolith, only positive ones.

This is, of course, the result of the efforts of Cao Xi and the entire institution. In terms of business, exercising restraint in scale is the standard for returns, and selecting high - quality projects is the standard for investment. This institution also has its own unique style. For example, the name of the institution and the password of the public Wi - Fi in the meeting room are related to "2001: A Space Odyssey", which we won't elaborate on here.

For instance, at last year's US dollar Annual General Meeting (AGM), one of the small gifts prepared by Monolith for its US dollar LPs was a science - fiction novel by Arthur C. Clarke. This year, it was the English version of Liu Cixin's classic short story "A View From The Stars", translated from "Zhaowen Dao".

The story of the novel is quite simple. It's about a group of scientists facing a life - and - death choice: to learn the secrets of the universe and then die immediately, or to live a mediocre life without ever solving the ultimate mystery. At first glance, it sounds extreme.

From these small details, you can roughly get a sense of the style of this investment institution that has only been established for four years. It still retains its edge and has a distinct style. You may not like it, but you can't ignore it.

This article is from the WeChat official account "China Venture Capital News". Author: Cao Weiyu & Zhang Nan. Republished by 36Kr with permission.