DCM Is Raising Another $100 Million Fund To Make Investments In Android-Based Startups

It looks like global venture firm DCM plans to make more bets on Android apps, with another fund that seems to be devoted to investing in startups that develop for the mobile OS. According to an SEC filing, it's seeking to raise $100 million for A-Fund II, the second strategic fund aiming to take advantage of innovation in the Android ecosystem. The first A-Fund was raised in 2011 when the battle between iOS and Android apps was just getting started. The A-Fund was developed in partnership with Asia's Tencent, KDDI, and GREE to make investments in startups founded in the U.S., China, and Japan that were building apps for Google's mobile OS. The belief at the time was that there was a huge opportunity for Android adoption in China and other developing markets, and those firms wanted to make early bets to ride that wave. It was also a time when other venture firms were a little more bullish on iOS development. Kleiner Perkins, for instance, had created its iFund to invest in iPhone apps back in 2008, but doubled down on the fund with a $200 million commitment in 2010 with the release of the iPad. That said, early returns from DCM's bet on Android seem pretty positive. The biggest winner out of the fund so far was an investment in Kakao, which later merged with Daum and is now publicly traded in Korea with a $7 billion market cap. (DCM followed on its A-Fund investment by putting money into Kakao's Series A round through its main fund.) In addition, the A-Fund seeded Yik Yak, which DCM also later invested in through its main fund. Earlier this month, that company closed on an additional $61 million in funding led by Sequoia. Life360 is another company to graduate from the A-Fund to a full investment by DCM -- in its case a $10 million Series B investment led out of the main fund. It has since gone on to raise an additional $25 million as part of a strategic partnership with ADT. Other notable investments include Freee, which is a cloud services startup providing back-office tools for Japanese SMBs, and PlayStudios, which develops gaming solutions for casinos and has partnered with MGM. Exits from the first fund include mobile game startup Loki Studios, which was acquired by Yahoo, and Kanbox, which was acquired by Alibaba. DCM declined to comment on the public filing, but it's probably worth noting there are some differences between A-Fund I and A-Fund II's SEC records. The latter fund lists only DCM co-founder and general partner David Chao and general partner Jason Krikorian as directors, while DCM general partners Peter Moran, Dixon Doll, Tom Blaisdell, and Carl Amdahl were all on the filing for Fund I. It's also worth noting that many of the more successful startups to come out of that fund may have started on Android, but are now mostly multi-platform. You can include KakaoTalk, Yik Yak, Life360 and Coffee Meets Bagel as companies that are now on iOS as well as Android -- and some of its investments are available on other platforms as well. It's a fair question to ask if this fund is betting on Android in particular or mobile in general, especially as more developers realize the need to be on multiple devices. But since DCM's website still lists the A-Fund as an Android-focused fund, we'll take their word for it. Update: While not commenting on any successor fund, DCM general partner Jason Krikorian had this to say about the rationale for betting on Android and A-Fund portfolio companies' commitment to it so far: From the beginning, there was a realization that most potential portfolio companies would be cross platform. However, there are many companies in that fund (e.g., Life360, Kakao, Augmedix (Google glass related health care play), Wandoujia (an app store in China)) that have taken unique advantage of the opportunities afforded by the openness and market momentum of the Android platform. As you know, the growth of Android since we first conceived of the A-Fund with our strategic partners in 2010 has been phenomenal.
Ryan Lawler

Ryan Lawler is a Writer at Gigabuzz, focused on covering early-stage startups, especially those with a technology focus and great perks.

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