Recently, USD LPs are "back".

The period when USD funds have been extremely cautious and silent is passing, but new tests are far from over.

With the IPO channel narrowing and the pace of investment and financing slowing down, the primary market is cooling down. However, the fundraising side has not cooled synchronously, and capital from LPs is still being released.

According to FOFWEEKLY's research, in September, the investment activity of institutional LPs rose 18.8% month-on-month and 56.8% year-on-year, hitting the highest level since May 2025.

In fact, not only are domestic LPs increasing their capital contributions, but USD funds are also returning in a brand-new posture.

VCs Start Raising USD Capital

Good news about USD fundraising keeps coming.

In October 2026, Starlink Capital completed the first close of its Phase 1 USD fund. Together with the final closing of its third VC fund and the first phase of its growth fund in the first half of the year, it has officially established a dual-currency fund structure. Its LPs include top-tier Asian family offices and FOFs, large industrial-backed conglomerates, and international investors from the Middle East and Europe.

In fact, it is not just Starlink Capital. Since the beginning of this year, many USD funds have started raising new-phase funds, and a number of institutions with USD fund background have also entered the market one after another, kicking off a new round of fundraising.

In September, Linear Capital completed the first close of its sixth USD fund. Its LPs cover the world's top sovereign funds, well-known market-oriented FOFs, leading investment institutions, listed companies and multiple global family offices, among which SF Overseas subscribed for USD 10 million as a limited partner.

It is reported that the fund took only three months from launch to the first close, making it one of the USD funds that entered the market for fundraising in 2026 with the fastest first close speed. The fund targets a size of USD 250 million, and mainly invests in equity of early-stage enterprises in the cutting-edge technology sector.

According to news in August, Chenyi Investment's first USD fund has a target size of USD 1 billion, with about USD 800 million raised so far, close to final closing. Among them, Alibaba contributed USD 500 million, and the fund takes M&A and integration as its core strategy. In addition, GigaDevice's subsidiary Xinji Jiali subscribed for a 25% stake in the overseas private equity fund Yunfeng Investment V, L.P., focusing on investment in the technology sector.

Going further back, Warburg Pincus, Yuanmu Rhythm, Blue Pool Capital, BlueRun Ventures, Photosynthetic Ventures, BAI Capital, Black Ant Capital, and Yaotu Capital all completed new rounds of foreign currency fund fundraising this year.

At this frequency, there is almost news of USD fund establishment or closing in the primary market every month. For this, industry practitioners have a very real perception: a practitioner who has been on the front line of fundraising all year round revealed to us, "Since last year, USD fundraising has indeed become increasingly lively."

From the perspective of talent demand, this perception can also be confirmed. A few days ago, Eden, a headhunter deeply rooted in the primary market, told us: "This year we have received many commissions from VC institutions for recruitment positions including USD IR, some of which are key positions that have been frozen for many years before restarting."

A real phenomenon is emerging — USD IR professionals are becoming highly sought-after.

It is worth noting that this round of recruitment boom not only comes from USD/dual-currency institutions, but also many institutions that originally focused on RMB funds have started to lay out overseas businesses, adding new USD IR positions to prepare for USD fund fundraising. According to people familiar with the matter, these institutions will mainly focus on emerging markets such as Southeast Asia and the Middle East.

Foreign Capital That Is No Longer "Extremely Cautious and Silent"

The period when foreign capital was extremely cautious and silent is passing.

Since 2025, under the dual support of policy support and innovation leadership, overseas LPs, who were once extremely cautious about the Chinese market and even avoided talking about it, have returned to the domestic primary market, bringing a turnaround for USD funds.

On the one hand, the pace of VCs raising USD capital is accelerating quietly. Since the end of 2025, many institutions including Monolith Capital, Source Code Capital, GL Ventures have completed considerable scale USD fund fundraising. On the other hand, foreign LPs are also returning through various paths. Since the beginning of this year, sovereign funds from the Middle East and Southeast Asia, as well as some European and American family offices and other institutions, have made multiple trips to China for research, with senior executives leading the teams in person, and some institutions have begun to seek cooperation with domestic GPs.

The signals on the data side are also positive. According to data from Zero2IPO Research Center, the fundraising scale of foreign currency funds in the first quarter of 2026 increased by 256.8% year-on-year, and the average newly raised scale of a single fund nearly doubled. The data from Xiniu is more specific: there have been more than 20 USD fund fundraising events in 2026, among which the completed ones include Warburg Pincus' USD 3 billion fintech fund, Blue Pool Capital's USD 1 billion Riverside Fund, Photosynthetic Ventures' USD 460 million Phase 6 fund, and Yuanmu Rhythm's USD 150 million first-phase fund, etc.

In addition, many industrial LPs are also investing in USD funds, and GigaDevice, Longcheer Technology, Century Huatong, and Tospo Lighting have all announced information on their investments in USD funds.

In step with this recovery of USD fundraising is the opening of policy channels, the latest move of which comes from Beijing. In October, at the 2026 Financial Street Forum Annual Conference, the Implementation Plan for Financial Support for the Construction of Beijing (Beijing-Tianjin-Hebei) International Science and Technology Innovation Center jointly issued by the financial and technology departments of Beijing, Tianjin and Hebei clearly proposed to increase support for scientific and technological innovation in areas such as the QFLP pilot program.

Shanghai proposed in July 2026 to deepen the QFLP pilot program, promote the "foreign capital managed by domestic institutions" model to attract high-quality overseas capital, optimize the establishment approval for mature foreign-funded management institutions, and facilitate foreign exchange settlement and exchange. Shenzhen has more specific policies on the foreign-funded management pilot program, proposing in the outline of the 15th Five-Year Plan to expand the scope of QFLP pilot institutions under total volume management, and the scale of QFLP pilot funds will reach 100 billion yuan by 2030.

In addition to policy dividends, another crucial variable driving the return of USD funds this round is AI. According to our observation, institutions that have successively launched USD funds this year, including Linear Capital, Yuanmu Rhythm, BlueRun Ventures, and Photosynthetic Ventures, have all targeted their new-phase funds at early-stage sectors such as AI, robotics and hard technology.

In the view of Wang Chunjie, Managing Director of Sanyu Capital, this AI boom cannot be missed. A "China-US dual powerhouse" pattern has taken shape globally, and foreign capital has very clear options — to bet on only one side, or to place bets on both sides.

An investor focusing on the AI track told us: "Some projects are structured in USD from the very beginning, such as overseas-focused and smart hardware projects. Some RMB funds did not have USD structures in the past, which will inevitably limit their investment projects, so they have to raise USD capital to invest."

"Many of the AI projects we are looking at now are oriented towards overseas expansion or hardware in the future. Investing with RMB will cause a lot of trouble later on," another GP that is currently raising a USD fund admitted.

When tracks such as overseas expansion, AI and smart hardware become new favorites, those projects that are structured in foreign currency from the very beginning are forcing GPs to re-embrace foreign capital.

It should be noted that this round of tentative return of foreign capital is no longer the same as the old game in the early stage. On the one hand, USD capital contributions have become "small but excellent", and the recovery rhythm on the fundraising side is clearly stratified. At present, institutions that can successfully complete USD fundraising are still mainly leading institutions, and many institutions actively control the scale during the fundraising window. In the past, USD 500 million or USD 1 billion was the norm, but now USD 200 million to 300 million has become the mainstream.

On the other hand, while LPs have changed, the "nature" of capital has also changed. Compared with traditional USD VCs that chase hot tracks, spread investments widely and win by probability, this round of capital from Middle East sovereign funds, Southeast Asian capital and European family offices pays more attention to technological barriers, commercialization capabilities and exit certainty.

USD capital is back, but new tests are far from over.

Conclusion

There is no doubt that the period when USD funds were extremely cautious and silent is passing.

When capital from Singapore, the Middle East and Europe flows in again, and the giants that once only invested in Europe and the United States begin to study the list of dark horse GPs in China... this 2026 USD fundraising boom is no longer a simple return, but a window period campaign that reshapes the landscape.

Now, a group of more picky, more cautious and more diverse background new LPs are coming in, along with a new set of more restrained, hard tech-focused gameplay. For GPs, this is a rare opportunity.

This article is from WeChat Official Account "FOFWEEKLY", written by Ling Xiu, authorized for release by 36Kr.