IDG-Accel, a joint venture between media giant IDG and venture capital firm Accel Partners, has finished raising two new China funds totaling $1.3 billion.

The warchest is significantly larger than the joint venture has raised in the past, because China’s market is on fire, said an IDG-Accel partner Hugo Shong in an interview. There are more than 500 million users of the internet in China now, up from just 300 million such users in 2005, when the joint venture first started investing in China. Not only are the internet, digital media, e-commerce and mobile markets growing quickly, but so are other areas such as healthcare and cleantech, he said.

We’ve known about the fund-raising for some time, but the announcement confirms the amount. We’re hearing Accel plans to announce yet another fund, likely for its U.S. activities.

The IDG-Accel China funds are as follows: A $550 million fund for early-stage and fast-growing companies, called the IDG-Accel China Growth Fund III, and a $750 million fund for later stage and pre-IPO investments, called China Capital Fund II.

IDG, a media firm that has invested in China since the early 1990s, has benefited from its early presence in China, bolstering its reputation after investing in big deals such as Baidu, Tencent, Ctrip and DangDang. DangDang alone is rumored to have returned at least $200 million to IDG. And Accel, the first venture firm to invest serious capital into Facebook, brings its Silicon Valley expertise to the table.

Shong noted the coincidental growth of the IDG-Accel fund sizes to match the growth — almost exactly — of the number of internet users in China. In 2005, the first IDG-Accel fund was only $300 million, back when the number of Internet users was 300 million.

The steadily rising fund sizes in China contrast with a tapering off or even decline of fund sizes in the United States.

The IDG-Accel alliance has seen seven of its portfolio companies file to go public or get acquired so far (Han Ting, Andon Health, Kang Hui, RDA, Golden Sun, ChangAn and Soufun). But the IPOs only listed over the past year, and so insider “lock up” agreements prevent IDG-Accel from cashing in its investments until later this year. Things are going so well, Shong said, that the joint venture expects to see seven to ten more IPOs this year.

[Disclosure: VentureBeat and IDG partner to produce the DEMO conference series.]

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